Creating a new resident tax credit available against the individual income tax, and including applicability provisions

This bill creates a new resident tax credit available against the individual income tax. The bill defines “new resident” to mean an individual who establishes residency in this state on or after January 1, 2022, is employed by an employer in this state, and who has not been a resident of this state at any time during the previous two tax years prior to establishing residency. The credit authorized in the bill is available to a new resident for the five consecutive tax years following the establishment of residency in this state. A new resident may begin to claim the credit in the first year of residency or begin to claim the credit in the following year after residency has been established. Except for the first year of residency, the bill requires a new resident to remain a resident of this state for each year the credit is claimed. If the new resident does not maintain residency, the new resident is disqualified from claiming the tax credit in that tax year and future tax years. An individual may establish residency in this state for purposes of the credit only one time in the individual’s lifetime. The amount of the credit is equal to a percent of the income tax imposed, determined as follows: for the first year, percent; for the second year, percent; for the third year, percent; for the fourth year, percent; and for the fifth year, 100 percent. The bill requires the department of revenue to adopt rules to administer the bill. The bill applies to tax years beginning on or after January 1, 2022.