LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 6324 NOTE PREPARED: Nov 24, 2024
BILL NUMBER: HB 1550 BILL AMENDED:
SUBJECT: Personal Exemptions.
FIRST AUTHOR: Rep. Jackson BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
DEDICATED
FEDERAL
Summary of Legislation: The bill increases the personal exemption to $1,500 in the definition of "adjusted
gross income" for a taxpayer, or, in the case of a joint return, for each spouse. It increases the exemption for
dependents to $1,500. It increases the exemption to $1,500 for the spouse of the taxpayer if a separate return
is made by the taxpayer and the spouse and if the spouse had no gross income for the calendar year.
Effective Date: January 1, 2025 (retroactive).
Explanation of State Expenditures: Department of State Revenue (DOR): The DOR will incur additional
expenses to revise tax forms, instructions, and computer programs to reflect the changes made by the bill.
The DOR's current level of resources should be sufficient to implement these changes.
Explanation of State Revenues: The bill would reduce state individual income tax revenue to the General
Fund by an estimated $92 M in FY 2026 and $91 M in FY 2027. The bill increases the personal exemption
and dependent exemption from $1,000 to $1,500 beginning in tax year 2025, with the revenue impact
beginning in FY 2026. The revenue impact will continue in years thereafter.
Explanation of Local Expenditures:
Explanation of Local Revenues: Because the increase in the tax exemptions will decrease taxable income,
counties imposing a Local Income Tax (LIT) would experience a decrease in revenue. Based on a weighted
average LIT rate of 1.67%, the revenue loss is estimated to be about $52 M beginning FY 2026.
State Agencies Affected: Department of State Revenue.
Local Agencies Affected: Local units that receive a local income tax distribution.
Information Sources: OFMA Income Tax database.
Fiscal Analyst: Randhir Jha, 317-232-9556.
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