Income tax; conformity; increase in standard deduction; refundable income tax credit for low-income taxpayers. Advances the Commonwealth's conformity with federal tax law to December 31, 2018, starting with taxable year 2019. The bill allows an individual taxpayer to itemize for state income tax purposes regardless of whether he itemizes on his federal return for taxable years 2019 through 2025. Current law requires a taxpayer to claim the standard deduction on his state return if he claims the standard deduction on his federal return.
The bill increases the standard deduction to $3,500 for single individuals and $7,000 for married persons filing jointly for taxable years 2019 through 2025. Under current law, the standard deduction is $3,000 for single individuals and $6,000 for married persons filing jointly.
The bill allows low-income individuals and married persons to claim either (i) a nonrefundable income tax credit equal to $300 for each individual, his spouse, and each claimed dependent or (ii) an income tax credit equal to 20 percent of the federal earned income tax credit, a portion of which would be refundable. Thirty percent of the value of the credit would be refundable for taxable years 2019 through 2025. Under current law, low-income individuals and married persons may elect either of these amounts; however, both options for claiming the credit are nonrefundable.
This bill was left in the Rules Committee.