The bill amends the Income Tax Act of 1967 to introduce new tax deductions and adjustments aimed at providing financial relief to specific groups of taxpayers, including disabled veterans and first-time home buyers. It allows taxpayers to deduct contributions made to qualified tuition programs and ABLE savings accounts established by other states, effective January 1, 2026, with a maximum deduction of $5,000 for single returns and $10,000 for joint returns. Additionally, it permits disabled veterans to exclude from taxable income any income reported on federal income tax form 1099-C related to the cancellation of student loans due to total and permanent disability. The bill also eliminates certain income and expense considerations related to oil and gas production from taxable income calculations.

Moreover, the bill introduces a phased approach to the deduction limits for retirement or pension benefits based on the taxpayer's birth year, starting with a 25% deduction for those born after 1959 in the 2023 tax year, increasing to 50% for those born after 1963 in 2024, and 75% for those born after 1967 in 2025. From 2026 onward, taxpayers can deduct retirement benefits according to existing law, subject to annual caps. Additionally, public service employees, including police and fire department employees, will be able to deduct their retirement benefits without limitations starting from tax years beginning on or after January 1, 2023. Overall, these changes aim to clarify tax treatment and provide incentives for targeted groups while adjusting tax calculations for various income sources.

Statutes affected:
Substitute (H-1): 206.30
House Introduced Bill: 206.30
As Passed by the House: 206.30