SB 1049

Tax rates for 2022

This bill decreases the individual income tax rates for tax year 2022. Under

current law, there are four income tax brackets for single individuals, certain

fiduciaries, and heads of households; married persons filing joint returns; and

married persons filing separate returns. The brackets are indexed for inflation. The

rate of taxation under current law for the four brackets for single individuals,

fiduciaries, and heads of households, before indexing for inflation, is as follows:

1. For taxable income not exceeding $7,500, 4.0 percent.

2. For taxable income exceeding $7,500, but not $15,000, 5.21 percent.

3. For taxable income exceeding $15,000, but not $225,000, 6.27 percent.

4. For taxable income exceeding $225,000, 7.65 percent.

Under current law, the tax rates in each bracket for married persons filing

jointly and married persons filing separately are the same, but the dollar amounts

in each bracket vary. The bill decreases the tax rate for each type of taxpayer as

follows:

1. The rate in the first bracket is decreased to 2.15 percent.

2. The rate in the second bracket is decreased to 2.85 percent.

3. The rate in the third bracket is decreased to 3.20 percent.

4. The rate in the fourth bracket is decreased to 4.50 percent.

Tax rates after 2022

Under the bill, if the amount of taxes submitted to the Department of Revenue

and deposited into the general fund in any taxable year after 2022 exceeds the

estimated amount of such taxes for the corresponding fiscal year under the biennial

budget act, DOR must determine how much the individual income tax rates in each

tax bracket will be reduced for the next taxable year in order to decrease individual

income tax revenue for that taxable year by the excess amount. The bill requires

DOR to reduce the individual income tax rates listed in each bracket in proportion

to the share of gross tax attributable to each of the tax brackets. The change in the

tax rates must carry forward to subsequent taxable years.

Under the bill, DOR must certify and report the change in the tax rates to the

Department of Administration, the governor, the Joint Committee on Finance, and

the Legislative Audit Bureau. If LAB arrives at a different calculation of the tax

rates than that determined by DOR, JCF decides which tax rates apply for the next

taxable year.

Under current law, if the amount of moneys projected to be deposited in the

general fund during the fiscal year that are designated as “Taxes" in the summary

of the biennial budget act is less than the amount of such moneys actually deposited

in the general fund during the fiscal year, the DOA secretary must deposit 50 percent

of the excess amount into the budget stabilization fund. However, the secretary is

not required to make the transfer if the balance of the budget stabilization fund on