SB 1

Under this bill, beginning in taxable year 2026, all individual taxpayers,

regardless of their income, pay the individual income tax at the rate of 3.25 percent.

In addition, for taxable years 2023 through 2025, the bill decreases individual

income tax rates each year for each tax bracket.

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

certain fiduciaries, heads of households, and married persons, and the brackets are

indexed for inflation. The rate of taxation under current law for the lowest bracket

for single individuals, certain fiduciaries, heads of households, and married persons

is 3.54 percent of taxable income. The rate for the second bracket is 4.65 percent.

The rate for the third bracket is 5.3 percent. And the rate for the highest bracket is

7.65 percent. After bracket indexing for taxable year 2022, the four brackets for

individuals, certain fiduciaries, and heads of households, to which the above rates

apply, are as follows: 1) taxable income from $0 to $12,760; 2) taxable income

exceeding $12,760 but not exceeding $25,520; 3) taxable income exceeding $25,520

but not exceeding $280,950; and 4) taxable income exceeding $280,950.

The bill establishes the following rates of taxation for taxable year 2023:

1. For the lowest tax bracket, 3.47 percent.

2. For the second bracket, 4.3 percent.

3. For the third bracket, 4.79 percent.

4. For the highest bracket, 6.55 percent.

The bill establishes the following rates of taxation for taxable year 2024:

1. For the lowest tax bracket, 3.4 percent.

2. For the second bracket, 3.95 percent.

3. For the third bracket, 4.28 percent.

4. For the highest bracket, 5.45 percent.

The bill establishes the following rates of taxation for taxable year 2025:

1. For the lowest tax bracket, 3.32 percent.

2. For the second bracket, 3.6 percent.

3. For the third bracket, 3.76 percent.

4. For the highest bracket, 4.35 percent.

Under the bill, for taxable year 2026 and after, the rate of taxation is 3.25

percent for all taxable income. The bill also requires the Department of Revenue to

update, by October 1 before the start of the applicable tax year, the individual income

tax withholding tables to reflect the tax rates, brackets, and sliding scale standard

deduction that are in effect for taxable years 2024, 2025, and 2026.