House Bill 26-012

This bill modifies the state income tax structure by eliminating state income tax liability for individuals earning less than $25,000 annually and adjusting upper-income tax brackets to maintain state revenue stability. The bill is intended to reduce the tax burden on low-income residents while reallocating tax responsibility toward higher-income earners based on ability to pay.

Beginning in tax year 2027, individuals with taxable income below $25,000 would no longer be subject to state income tax. Existing tax rates for middle-income earners remain unchanged under the bill. To offset the reduction in revenue resulting from the exemption, the legislation directs the Department of Revenue to apply adjusted marginal tax rates to income exceeding $330,000 annually, subject to fiscal analysis and implementation through rulemaking.

The bill also requires the Department of Revenue to update withholding guidance and provide public information regarding the revised tax structure. A reporting requirement directs the Department to evaluate the fiscal and economic impacts of the new tax brackets and submit findings to the Governor and the General Assembly.