Relating to individual and corporate income taxes by providing an alternative base income tax at the election of the taxpayer, and including effective date and applicability provisions

This bill relates to individual and corporate income taxes by creating an alternative base income tax imposed at the election of the taxpayer. Division I relates to the computation and imposition of an alternative base income tax.5A, a resident or nonresident individual may elect to be subject to an alternative base income tax as provided in the bill. The state income tax of a taxpayer making an election shall be an amount of tax equal to the taxpayer’s base income times four percent. “Base income” is defined as taxable income as properly computed for federal income tax purposes under section of the Internal Revenue Code, with the following adjustments: less interest and dividend income, less net capital gain income, and less social security benefits and retirement income. 16. Taxpayers who are years of age or older who elect the alternative base income tax are not required to file an income tax return if base income does not exceed $32,000 for a married person filing jointly, a head of household, or a surviving spouse, or $24,000 for all other persons. For purposes of calculating base income for the filing threshold, taxpayers are required to add back any social security benefits or retirement income otherwise exempt under the bill except for military retirement pay. Taxpayers who meet these requirements and who do not file a tax return are deemed to have elected to be subject to the alternative base income tax.33(1A), the state income tax of a corporate income taxpayer making an election shall be an amount of tax equal to the taxpayer’s base income times percent. “Base income” is defined as taxable income as properly computed for federal income tax purposes under the Internal Revenue Code, with the following adjustments: less interest and dividend income and less net capital gain income. An electing corporate income taxpayer shall not be allowed any nonrefundable or refundable tax credit for the tax year for which the election is made. Division II makes miscellaneous conforming changes. Division III provides that the bill takes effect January 1, 2023, for tax years beginning on or after that date.