This analysis does not consider the effects of the federal conformity provisions, which the state’s fiscal note estimates will reduce revenues by $48.6 million in FY 2021, or the increase to the state’s existing foster-adoption credit, which state estimates project will reduce revenue collections by about $300,000 in FY 2021. Additionally, HB 949 includes two other provisions: an annual update that brings the state into conformity with 2019 changes to federal itemized income tax deductions and an increase in the tax credit for adoptive parents of foster children. The legislation also creates a low, non-refundable income tax credit intended to help address widespread tax increases that result from raising the tax brackets of low- and middle-income filers to 5.375 percent. House Bill 949 would eliminate the state’s current graduated tax structure, in which tax rates increase from 1 to 5.75 percent as income levels go up, in favor of adopting a single, flat income tax rate of 5.375 percent. Bill Proposes Tax Cuts for High Earners at Expense of Middle-Class Families This fiscal impact is partially offset by $75 million in net tax increases that would be shared by 538,000 low- and middle-income households. Overall, 88 percent of the $458 million in net tax cuts would go solely to filers earning over $108,000 per year.
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