HB1037XX update: bill changed to deduction split, still raises taxes

Yesterday, the House JCAB met and passed several "revenue measures" (i.e. tax increases) related to the Fallin/Step Up Oklahoma plan. Among these was HB1037XX, which I wrote about in Fallin/Step Up income tax hike is higher than we're being told.

HB1037XX was originally a major income tax hike for lower- and middle-income families in particular. The good news is that that language was stripped from the bill in committee yesterday - a small, temporary victory for taxpayers. However, the language was replaced with changes to the standard deduction that will still mean a triple-digit tax hike on single individuals making over $25,000 or married couples making over $50,000.

HB1037XX leaves the standard deduction in place for single individuals who make less than $25,000, for married couples filing jointly who make under $50,000, and for head-of-household filers who make less than $37,500.

If you make above those figures, the standard deduction will be changed to the following levels:

• Single-filer: from $6,350 down to $5,250 (minus $1,100)
• Head of household filer: from $9,350 down to $7,700 (minus $1,650)
• Married filing jointly: from $12,700 down to $10,500 (minus $2,200)

Current bill language does not change the income tax brackets or remove the personal exemption like the previous language did. It does, however, unnecessarily render our income tax even more complicated that it currently is, in addition to raising taxes.

Back to three scenarios I presented in the previous post on HHB1037XX:

• Married couple filing jointly, 2 kids, standard deduction, earning $40k: $0 more in taxes
• Married couple filing jointly, 2 kids, standard deduction, earning $60k: $110 more in taxes
• Married couple filing jointly, 2 kids, standard deduction, earning $80k: $110 more in taxes

Single-filers who make over $25k would pay an additional $55 in income taxes. HOH-filers over $37,500 would pay $82.50 more, and married-filing-jointly over $50,000 would pay $110 more.

The fiscal analysis for this current language estimates it would raise $41M in income taxes for FY2019.

I'll post more on the other tax hikes passed by the House JCAB later.