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HF 496

A bill for an act modifying the individual and alternate income tax rates, and including applicability provisions.

2025-2026 Regular Session Introduced by Dave Jacoby

Bill HF 496 lowers the standard income tax rate to 2.5% and introduces alternate tax rates for higher earners, aiming for a fairer tax structure for all residents.

Introduced, referred to Ways and Means.
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Bill Summary · HF 496

Summary of Bill HF 496

Bill Number: HF 496
Title: A bill for an act modifying the individual and alternate income tax rates, and including applicability provisions.
Status: Introduced, referred to Ways and Means
Introduced Date: February 20, 2025
Classification: Bill
Subject: Income Taxes

Purpose and Intent

The primary purpose of Bill HF 496 is to amend the existing individual income tax rates in the state. The bill seeks to adjust both the standard and alternate income tax rates applicable to residents and non-residents, aiming to provide a more equitable tax structure based on income levels.

Key Provisions

The bill proposes the following significant changes to the income tax code:

  1. Modification of Tax Rates:

    • The standard income tax rate for all residents and non-residents will be adjusted to 2.5% from the previous rate of 3.8%.

  2. Alternate Income Tax Rate:

    • For married couples filing jointly, heads of households, or surviving spouses with a net income exceeding $13,500, the alternate tax will apply. This alternate tax will be calculated as the lesser of:
      • 3% of the income exceeding $13,500, or
      • The regular tax liability without this provision.

  3. Higher Income Threshold:

    • For those with a net income exceeding $32,000, the same alternate tax calculation will apply, using the same rate of 3% on the income exceeding $32,000.

  4. Filing Separately:

    • Taxpayers who choose to file separately will compute the alternate tax based on the total net income of both spouses.

  5. Exclusions:

    • The alternate tax provisions do not apply if one spouse elects to carry back or carry forward a net operating loss as defined under the Internal Revenue Code or state law.

Impact

Who Would Be Affected:

  • Residents and Non-Residents: All individuals earning taxable income in the state will be subject to the new tax rates.
  • Married Couples and Heads of Households: Those with net incomes above the specified thresholds will need to consider the alternate tax calculations.

Financial Implications:

  • The reduction in the standard tax rate may benefit lower-income earners, while the alternate tax provisions could provide tax relief for those with higher incomes, depending on their specific financial situations.

Procedural Aspects

  • The bill was introduced on February 20, 2025, and has been referred to the Ways and Means Committee for further consideration. The timeline for additional legislative actions or potential enactment has not been specified.

This summary provides an overview of Bill HF 496, highlighting its intent to modify income tax rates and the implications for taxpayers within the state.

Compiled from official sources — confirm details with the bill’s official record.

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