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HB 275

Treatment of animals.

2025 Regular Session Introduced by Eric Barlow and 8 co-sponsors

HB 275 sets personal income tax to 0% from 2026 and makes filing optional, causing multi-year General Fund losses (about $1.8B in 2026 to $4.1B in 2029) for all taxpayers.

Assigned Chapter Number 93
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Bill Summary · HB 275

Summary — HB 275: Eliminate Personal Income Tax

Status: Action postponed indefinitely (most recent status recorded 2025-06-03)
Primary subject: Taxation — personal income tax
Introduced: (bill text indicates) effective for tax year 2026 if enacted

Note: This summary addresses the version of HB 275 that would eliminate the state personal income tax (as analyzed in the Legislative Finance Committee fiscal note). Other unrelated bills with the same number (on different topics or in other states) are not discussed here.

Main purpose

HB 275 would set the state personal income tax rate to 0% beginning in tax year 2026 and would make filing personal income tax returns not required (though taxpayers would still be permitted to file). The bill does not change existing credits, deductions, or exemptions in the draft analyzed.

Key provisions

  • Sets the personal income tax rate to zero percent effective tax year 2026.
  • Removes the requirement to file a personal income tax return (filing would remain optional).
  • Leaves existing tax credits, deductions, and exemptions unchanged in the draft analysis (no explicit repeal or modification).
  • Does not explicitly amend corporate or other tax codes in the fiscal note; it applies to individual income tax and income items reported through personal filings (including pass-through and fiduciary filings).

Fiscal impact (estimates from the Legislative Finance Committee)

  • Estimated recurring General Fund revenue reductions:
    • FY2026: ($1,800,000 thousand) = $1.8 billion
    • FY2027: ($3,800,000 thousand) = $3.8 billion
    • FY2028: ($3,900,000 thousand) = $3.9 billion
    • FY2029: ($4,100,000 thousand) = $4.1 billion
  • Basis: December 2024 Consensus Revenue Estimating Group (CREG) forecast for withholding, estimated payments, final settlements, oil & gas proceeds withholding, pass‑through entity withholding, and fiduciary payments.
  • The fiscal note cautions these estimates assume credits/refunds remain constant; elimination of tax liability could increase refundable credit outlays and refund claims (upward risk to cost).
  • Personal income tax represented roughly 17% of recurring general fund revenues in FY24 per the analysis — removing it would be a substantial General Fund revenue loss.

Who would be affected

  • All individual taxpayers who currently pay state income taxes (wage earners, salaried employees).
  • Pass‑through business owners whose business income flows to individual returns.
  • Individuals receiving oil & gas proceeds, estates and trusts (fiduciary filings).
  • State budgets and programs funded from the General Fund (materially affected by large revenue reductions).
  • Tax administration (Department of Taxation & Revenue) — potential operational and policy adjustments (but no detailed administrative cost estimate provided in the note).

Important assumptions, risks, and policy considerations

  • Estimates assume no immediate change to credits/deductions. If credits are refundable or behavior changes occur (more filings to claim refunds), fiscal costs could be higher.
  • Economic and behavioral responses (migration, labor supply, investment) are uncertain and not built into short-run revenue estimates.
  • Policy trade-offs highlighted: adequacy (funding government services), equity (who benefits), simplicity (reduced compliance), and competitiveness (possible business attraction).

Procedural / timeline notes

  • The bill would take effect for tax year 2026 per the bill text summarized in the fiscal analysis.
  • Status recorded as “action postponed indefinitely” (2025-06-03), indicating no active movement at that time.
  • Fiscal analysis was prepared quickly relative to the bill’s hearings; the LFC noted additional agency analyses could change estimates.

If you want, I can:
- Produce a one-page fiscal impact brief showing year‑by‑year revenue loss and affected revenue components, or
- Compare the revenue loss to major state budget items to show scale (e.g., K–12, Medicaid).

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

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