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HB 5761

AN ACT RELATING TO TAXATION -- PERSONAL INCOME TAX

2025 Regular Session Introduced by Bill O'Brien

Summary of HB 5761: Personal Income Tax Act Purpose and IntentHB 5761, the Personal Income Tax Act, aims to reform the state's personal income tax system. The primary goals of the

05/06/2025 Committee recommended measure be held for further study
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Bill Summary · HB 5761

Summary of HB 5761: Personal Income Tax Act

Purpose and Intent

HB 5761, the Personal Income Tax Act, aims to reform the state's personal income tax system. The primary goals of the bill are to:

  1. Simplify the tax code and reduce the administrative burden on taxpayers
  2. Provide tax relief for low- and middle-income residents
  3. Modernize the state's tax system to better reflect the current economy

Key Provisions

The bill proposes the following key changes to the state's personal income tax:

  1. Flat Tax Rate: Replaces the current multi-tiered income tax system with a flat tax rate of 4.5% on all taxable income.
  2. Standard Deduction Increase: Increases the standard deduction from $12,000 to $15,000 for single filers and from $24,000 to $30,000 for married filing jointly.
  3. Child Tax Credit: Introduces a new $500 per-child tax credit for families with dependent children under the age of 17.
  4. Retirement Income Exclusion: Allows taxpayers aged 65 and older to exclude up to $30,000 of retirement income (e.g., pensions, 401(k) distributions) from their taxable income.
  5. Earned Income Tax Credit Expansion: Expands the state's Earned Income Tax Credit (EITC) program, increasing the maximum credit from $1,500 to $2,000 and extending eligibility to individuals without children.

Affected Parties

The changes proposed in HB 5761 would primarily impact the following groups:

  • Individual Taxpayers: All state residents who file personal income taxes would be affected by the new flat tax rate, increased standard deduction, and other credits and deductions.
  • Retirees: Older taxpayers would benefit from the new retirement income exclusion.
  • Families with Children: Families with dependent children would receive the new per-child tax credit.
  • Low- and Middle-Income Workers: The EITC expansion would provide additional tax relief for these individuals.

Procedural and Timeline Aspects

HB 5761 was introduced on January 21, 2025, and is currently scheduled for a hearing and/or consideration on May 6, 2025. If passed, the new tax provisions would take effect starting with the 2026 tax year.

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

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