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SB 1956

INC TX-INTEREST MODIFICATION

104th Regular Session Introduced by Elgie Sims

SB 1956 lowers state income tax on investment/retirement account interest, increases standard deduction, benefiting investors, savers, and taxpayers claiming standard deduction.

Rule 3-9(a) / Re-referred to Assignments
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Bill Summary · SB 1956

Summary of SB 1956: INC TX-INTEREST MODIFICATION

Bill Overview

SB 1956, titled "INC TX-INTEREST MODIFICATION", is a bill currently under consideration in the state legislature. Introduced on March 5, 2025, the bill aims to modify the state's personal income tax laws related to interest earned on investments and other assets.

Key Provisions

The main components of SB 1956 include:

  1. Reduced Tax Rate on Investment Interest: The bill proposes lowering the personal income tax rate applied to interest earned from investments, savings accounts, and other similar financial assets. The new rate would be 5%, down from the current 7% rate.

  2. Exemption for Retirement Account Interest: Interest earned on funds held in qualified retirement accounts, such as 401(k)s and IRAs, would be fully exempt from state personal income taxes under this legislation.

  3. Increased Standard Deduction: The standard deduction allowed on state personal income tax returns would be increased by $2,000 for individual filers and $4,000 for joint filers.

Impact and Affected Parties

If enacted, SB 1956 would primarily benefit the following groups:

  • Investors and Savers: Individuals with investment portfolios, savings accounts, and other interest-bearing assets would pay less in state taxes on the income generated from those holdings.

  • Retirees: Seniors and others with funds in qualifying retirement accounts would no longer owe state taxes on the interest earned in those plans.

  • Taxpayers Claiming the Standard Deduction: The higher standard deduction amounts would reduce the state tax liability for many individual and household filers.

The reduced tax revenues from these changes may impact the state's budget and funding for public services, though the bill's supporters argue the provisions will stimulate economic growth and investment.

Next Steps

SB 1956 has been referred to the legislative Assignments committee for further review and consideration. If approved by the committee, the bill would then proceed to a full floor vote in the state senate. The timeline for potential enactment remains uncertain at this stage.

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

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