Reduces the amount of certain individual income tax exemptions, deductions, and credits
The passage of HB 405 will have a tangible effect on state tax revenues by slightly increasing the taxes owed by seniors and individuals with disabilities, which could be seen as a controversial move given the state's tax policies. Proponents of the bill argue that these adjustments are necessary to balance the state budget and reduce fiscal deficits. In contrast, critics express concern that the reduced exemptions disproportionately impact vulnerable populations, including the elderly and disabled, who often rely on fixed incomes. As such, the bill's modifications to deductions and credits may lead to a greater financial burden for those least able to afford it.
House Bill 405 seeks to amend the state's income tax laws by reducing certain individual income tax exemptions, deductions, and credits. Specifically, it lowers the tax exemption for annual retirement income and disability income from $6,000 to $5,880, thereby slightly increasing the tax burden on individuals aged 65 and older, as well as on those receiving disability income. Additionally, the bill modifies the construction code retrofitting deduction, which will now provide only 49% of the expenses rather than the previous 50%, along with a reduction in the maximum deductible amount from $5,000 to $4,900. Lastly, the credit for bone marrow donor expenses is reduced from 25% to 24.5%.
General sentiment around HB 405 is mixed among legislators and constituents. Supporters contend that reducing the tax code complexities and addressing budget shortfalls is vital for the state’s economic health. However, many oppose the bill, viewing it as a regressive tax measure that could exacerbate financial challenges for already vulnerable groups. The debate highlights a significant tension in balancing state fiscal responsibility with the need to protect constituents who might be adversely affected by such tax changes.
Notable points of contention include the perception that the bill unfairly targets low-income and aging populations while the state manages budgetary constraints. Critics argue that the reductions in tax exemptions and deduction rates demonstrate a lack of commitment to support the state's elderly and disabled communities. Furthermore, there are worries that reducing incentives for bone marrow donations could lead to decreased participation in donor programs, negatively impacting health initiatives focused on blood donation.