Section 2 of the bill modifies how taxable income is determined
for individuals for purposes of the state income tax. Specifically, it:
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Imposes a cap for taxpayers with adjusted gross incomes equal to or exceeding $400,000 on certain itemized deductions claimed under the internal revenue code;
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Repeals, for social security income that is included in federal taxable income only, the cap on the deduction for pension and annuity income received;
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Adds a cap, per taxpayer per beneficiary, on the deduction for contributions made to 529 plans;
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Requires individual taxpayers to add amounts of federal taxable income that are equal to the enhanced federal deductions for food and beverage in a restaurant for the 2022 income year; and •
Extends the limit on the federal deduction allowed under section 199A of the internal revenue code. Section 3 increases the earned income tax credit to 20% for
income tax years commencing on or after January 1, 2022, and applies the lowered minimum age for individuals without a qualifying child in the federal American Rescue Plan Act of 2021 to the state credit for income tax years commencing on or after January 1, 2022. Section 4 funds the child tax credit for income tax years
commencing on or after January 1, 2022, and allows a child tax credit in the state regardless of the federal requirement that a qualifying child must have a social security number for the federal child tax credit. Section 4 also specifies that if the changes to the federal child tax credit in the American Rescue Plan Act of 2021 are no longer in effect, the percentages of the state child tax credit are increased. Sections 5 through 7 make the state's corporate income tax more
uniform compared to other states by replacing the current combined reporting standard with the multistate tax commission's standard. In addition, these sections modify the computation of the receipts factor to make it more congruent with the unitary business principle.
In addition to making the state's corporate income tax more
uniform compared to other states, section 6 also prevents corporations from using tax shelters in foreign jurisdictions for the purpose of tax avoidance. Section 7 also modifies how taxable income is determined for C
corporations for purposes of the state income tax. Specifically, it requires corporate taxpayers to add amounts of federal taxable income that are equal to the enhanced federal deductions for food and beverage in a restaurant for the 2022 income year. Section 8 repeals a state subtraction for certain capital gains
incurred. Section 9 creates a temporary income tax credit for a business for
a percentage of the conversion costs to convert the business to a worker-owned coop, an employee stock ownership plan, or an employee ownership trust. Sections 10 through 13 address the avoidance of income tax by
certain captive insurance companies.
