This bill amends the Income Tax Act of 1967, specifically section 51, to adjust the income tax rates for individuals other than corporations. The new tax rates are set at 4.05% for the period from January 1, 2023, to January 1, 2024, and will increase to 4.25% from January 1, 2024, to January 1, 2026. After January 1, 2026, the tax rate will decrease to 3.9%. The bill also removes previous provisions that linked tax rate adjustments to the percentage increase in general fund revenue compared to inflation rates.

Additionally, the bill mandates that certain percentages of gross tax collections must be deposited into the state school aid fund and the agricultural preservation fund. It specifies that from October 1, 2025, through September 30, 2026, 1.033% of gross collections must be deposited into the school aid fund, and from October 1, 2026, onwards, this percentage will increase to 1.040%. The language throughout the bill has been updated to clarify obligations, such as stating that certain amounts "must" be deposited rather than "shall," and it also includes provisions for how taxable income is computed for residents and nonresidents.

Statutes affected:
House Introduced Bill: 206.51