Changes the middle and upper income tax brackets for purposes of calculating individual income tax and reduces the amount of the deduction for excess federal itemized personal deductions (Items #1 & 6) (OR +$543,000,000 GF RV See Note)
The implications of HB13 on state laws involve a direct modification of how individual income taxes are calculated and assessed. By lowering the deduction for excess federal itemized deductions, taxpayers may face increased taxable income, which could impact their overall tax liabilities. This revenue change could be beneficial for the state in bolstering its financial resources but may also burden taxpayers with higher effective tax rates, particularly those near the cutoff for the upper income bracket.
House Bill 13 aims to amend the individual income tax structure in Louisiana by adjusting the tax brackets for middle and upper-income earners. The bill proposes to compress the existing tax brackets, reducing the second bracket to apply to income over $12,500 instead of the current $50,000. This change seeks to simplify the tax calculation process while potentially increasing revenue for the state. Additionally, the bill reduces the deduction allowed for excess federal itemized personal deductions, dropping it from 100% to 50% for taxable years beginning on and after January 1, 2018.
The overall sentiment around HB13 seems to reflect mixed feelings among legislators and the public. Some view the compression of tax brackets and reduction in deductions as a necessary reform to streamline the tax process and enhance state funding. However, there is concern from various corners, particularly from taxpayer advocacy groups who argue that reducing deductions effectively increases the tax burden on individuals, thus stoking discontent among constituents who depend on these deductions to minimize their tax liability.
Notable points of contention during discussions of HB13 include debates over its potential impact on lower and middle-class taxpayers, and whether the proposed changes would effectively alleviate or exacerbate their financial burdens. Advocates for the bill argue that simplifying the tax code can lead to greater compliance and understanding among taxpayers, while opponents caution that the reductions in deductions could disproportionately affect those already struggling financially.