An Act Making Adjustments To The Personal Income And The Earned Income Tax Credit And Concerning The Human Capital Investment Tax Credit, Tax Gap Reporting And The Tax Incidence Report.
This bill is expected to impact the state’s tax revenue by changing the applicable tax rates and enhancing tax credits that allow for income sources like pensions and annuities to be taxed at reduced rates based on income levels. The changes aim to reduce tax burdens on specific groups, especially retirees and those earning below a certain income threshold. As part of the changes, reporting requirements would also undergo modification to ensure better tracking of tax credits and the overall tax gap in the state, aiming for improved transparency and efficiency in tax collection.
House Bill 06934 aims to implement various adjustments to the personal income tax and the Earned Income Tax Credit (EITC), while also concerning the Human Capital Investment Tax Credit, tax gap reporting, and the Tax Incidence Report. The bill proposes changes to the personal income tax structure, including a revision of tax rates and thresholds for deductions across different income brackets. Specifically, it introduces phases of income tax deductions for pension and annuity incomes, alongside adjustments to the EITC percentages to better accommodate low to moderate-income residents.
Despite its intended benefits, the bill has faced criticism over concerns regarding the effectiveness and fiscal implications of the proposed adjustments. Opponents argue that while tax credits like the EITC and Human Capital Investment Tax Credit are necessary for supporting low-income families, such adjustments may also lead to revenue losses for the state during implementation. Furthermore, there are worries that the adjustments could complicate tax matters, particularly for those unfamiliar with the new structures and thresholds, potentially leading to compliance issues and inequities among various income groups.