SB 1230 Tax Reform Bill Summary
CONFERENCE COMMITTEE SUBSTITUTE FOR SB 1230
Senator Mike Mazzei and Representative Dave Dank
Senate Tax Reform Proposal
5/15/12
The Senate tax reform proposal centers on a decrease in the top marginal income tax rate and the reduction, elimination or reform of numerous tax preference items. The rate decrease is set at a level which will offset the impact on individuals of losing the ability to claim certain exemptions and credits. Most tax preference programs share in some kind of reduction or modification. Transferrable tax credits are retained, but reformed.
Tax Rate: Reduces top marginal income tax rate to 5% in 2013 and to 4.75% in 2014.
FY-13: + $26 million FY-14: + $11 million FY-15 (full year): ($76 million)
Tax Preferences:
Retained:
• Preferences for retirees and active duty military personnel;
• Standard and itemized deductions;
• Treatment of net operating losses;
• Capital gains deduction;
• Volunteer firefighter credit;
• Nonrecurring adoption expense deduction; and
• Tornado property damage credit.
Modified:
• Personal exemption allowed only for those under specified income thresholds ($35,000 for single filers and $70,000 for joint filers);
• Grocery sales tax relief allowed, but no longer refundable;
• Transferable credits made refundable, value reduced by 20% and sunset applied as applicable;
• Value of preference reduced by 20% for Film Rebate program, donations to scholarship organizations, CNG investment credits and the investment/new jobs credit; and
• Child/child care credit eligibility changed from income of $100,000 to $50,000.
Eliminated:
• Over 30 tax preferences available to businesses; and
• Some preferences available to individuals including: low income property tax credit and state earned income tax credit.
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