The association received an important Tax Alert from our legal counsel, Smith Anderson. Bill Nelson, a partner at the firm, outlined the tax provisions contained in the conference budget bill released by the General Assembly yesterday morning. This PDF version of the complete Tax Alert focuses on the following four sections:
1. Personal Income Tax Changes
- The personal income tax rate would decrease from 5.499% to 5.25% in 2019.
- The standard deduction would be increased in 2019.
- The child tax credit would be converted to a deduction in 2018.
2. Corporate Income and Franchise Tax Changes
- The corporate income tax rate would decrease from 3% to 2.5% in 2019.
- The franchise tax rate for S corporations would be capped at $200 for the first $1 million of franchise tax base beginning with the 2019 franchise tax year.
3. Mill Machinery and Sales Tax Changes
- The mill machinery tax would be repealed July 1, 2018.
- Items currently subject to the mill machinery tax would be exempt from the sales tax.
- A study would be undertaken to consider the proper scope of the mill machinery exemption.
- A new sales and use tax exemption would be provided for sales of repair or replacement parts to ready-mix concrete mills, effective July 1, 2018.
- A targeted sales tax exemption would be provided for a large fulfillment facility, effective July 1, 2017.
- A sales tax refund would be provided for taxpayers receiving JDIG grants for “transformative projects,” effective July 1, 2017.
4. Renewable Energy Tax Credit Changes
- The delayed repeal of the renewable energy tax credit for certain projects that were at least 50% complete by the end of 2015 would be extended from January 1, 2017 to May 5, 2017 with respect to property used for biomass resources.
The conference bill is expected to be approved by the General Assembly later this week and then sent to the Governor.