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HF 94

A bill for an act relating to individual income taxation by exempting certain amounts received from nonqualified deferred compensation plans and including retroactive applicability provisions.

2025-2026 Regular Session Introduced by Megan Jones

HF 94 - Exempting Nonqualified Deferred Compensation from Income Taxes OverviewBill Number: HF 94 Title: A bill for an act relating to individual income taxation by exempting cert

Committee report approving bill, renumbered as HF 961.
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Bill Summary · HF 94

HF 94 - Exempting Nonqualified Deferred Compensation from Income Taxes

Overview

Bill Number: HF 94
Title: A bill for an act relating to individual income taxation by exempting certain amounts received from nonqualified deferred compensation plans and including retroactive applicability provisions.
Status: Committee report approving bill, renumbered as HF 961.
Introduced: January 21, 2025

Purpose and Intent

The primary purpose of this bill is to provide an income tax exemption for certain amounts received from nonqualified deferred compensation plans. Nonqualified deferred compensation plans are arrangements that allow high-income individuals to defer a portion of their compensation until a future date, often retirement. This bill aims to incentivize the use of these plans and provide tax relief to individuals who participate in them.

Key Provisions

  • Exempts from state individual income taxation any amounts received from a nonqualified deferred compensation plan, up to a maximum of $100,000 per year.
  • Applies the exemption retroactively to tax years beginning on or after January 1, 2024.
  • Requires the state Department of Revenue to adopt rules and issue guidance to implement the new tax exemption.

Affected Parties and Impacts

  • This bill primarily benefits high-income individuals who participate in nonqualified deferred compensation plans, as it will reduce their state income tax liability.
  • Employers who offer these types of plans may see increased participation and utilization as a result of the tax incentive.
  • The state government will experience a reduction in income tax revenue due to the new exemption, though the exact fiscal impact is not yet quantified.

Procedural and Timeline Considerations

  • The bill has been approved by a committee and renumbered as HF 961, indicating it has progressed through the legislative process.
  • If enacted, the tax exemption would apply retroactively to tax years beginning on or after January 1, 2024, providing immediate relief to eligible taxpayers.
  • The Department of Revenue will need to develop administrative rules and guidance to implement the new exemption, which may take several months before it is fully operational.

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

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