The 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 will be 4.35% for the period from October 1, 2007, to October 1, 2012, followed by a reduction to 4.25% from October 1, 2012, to January 1, 2026. The bill further establishes a tiered tax rate structure that will decrease to 4.15% from January 1, 2026, to January 1, 2027, then to 4.0% from January 1, 2027, to January 1, 2028, and finally to 3.9% starting January 1, 2028.

Additionally, the bill modifies the distribution of tax revenue, specifying that a percentage of gross collections will be allocated to the state school aid fund, with the percentage changing from 1.033% to 1.040% after October 1, 2026. It also mandates that 3.5% of the average farmland tax credits claimed in the previous three fiscal years be deposited into the agricultural preservation fund. The bill includes provisions for annualizing tax rates and clarifies the computation of taxable income for residents and nonresidents, as well as for beneficiaries of trusts.

Statutes affected:
House Introduced Bill: 206.51