Creating a nonrefundable individual income tax credit for certain taxpayers and a new top individual income tax bracket. (FE)

2. For a married couple that files a joint return, the maximum credit amount is $200 if the sum of the claimant's WTI and his or her spouse's WTI in the year to which the claim relates is less than $100,000. The maximum credit phases out from $200 to zero as the couple's household WTI increases from $100,000 to $150,000. For a married couple that files separately, the maximum credit amount is $100 if the claimant's WTI in the year to which the claim relates is less than $50,000. The maximum credit phases out from $100 to zero as the claimant's WTI increases from $50,000 to $75,000. Generally, both spouses of a married couple may claim the credit if they file separate returns.

Because the credit is nonrefundable, no refund is paid if the amount of the credit exceeds the taxpayer's tax liability. Part-year and nonresidents of this state may not claim the credit.

The bill also creates a fifth individual income tax bracket and a new tax rate for this bracket. For those who file as a single individual, fiduciary, or head of household, the new top rate is 8.88 percent on taxable income above $750,000. For married joint filers, the new 8.88 percent rate applies to taxable income above $1,000,000, and this new rate applies to married separate filers on taxable income above $500,000. As is the case under the current law brackets, the new bracket amounts are indexed for inflation.

The bill first applies to taxable years beginning on January 1, 2017.