SB 1210: Personal income taxes: tax rates.
- Session Year: 2017-2018
- House: Senate
- Latest Version Date: 2018-03-22
The Personal Income Tax Law imposes taxes based upon taxable income of individuals, estates, and trusts at specified rates from 1% to 9.3%, as provided.
This bill, for taxable years beginning on or after January 1, 2018, would revise the income tax rates and taxable income brackets by imposing an income tax rate of 8.8% instead of 9.3% on specified taxable income below $75,000 and $100,0000, as provided.
This bill would take effect immediately as a tax levy.
The Personal Income Tax Law imposes taxes based upon taxable income of individuals, estates, and trusts at specified rates from 1% to 9.3%, as provided.
This bill, for taxable years beginning on or after January 1, 2018, would revise the income tax rates and taxable income brackets by imposing an income tax rate of 8.8% instead of 9.3% on specified taxable income below $75,000 and $100,0000, as provided.
This bill would take effect immediately as a tax levy.
This act shall be known, and may be cited, as the Middle Class Tax Relief Act.
SEC. 2.Section 17041 of the Revenue and Taxation Code is amended to read:17041.(a)(1)There shall be imposed for each taxable year upon the entire taxable income of every resident of this state who is not a part-year resident, except the head of a household as defined in Section 17042, taxes in the following amounts and at the following rates upon the amount of taxable income computed for the taxable year as if the resident were a resident of this state for the entire taxable year and for all prior taxable years for any carryover items, deferred income, suspended losses, or suspended deductions:
If the taxable income is: | The tax is: |
Not over $3,650 | 1% of the taxable income |
Over $3,650 but not over $8,650 |
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Over $8,650 but not over $13,650 |
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Over $13,650 but not over $18,950 |
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Over $18,950 but not over $23,950 |
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Over $23,950 | $1,054.50 plus 9.3% of the excess |
(2)(A)For taxable years beginning on or after January 1, 2018, the income tax brackets and rates set forth in paragraph (1) shall be replaced with the following for taxable incomes not over seventy-five thousand dollars ($75,000), as annually adjusted pursuant to this section:
If the taxable income is:The tax is:Not over $8,2551% of the taxable incomeOver $8,255 but notover $19,571$82.55 plus 2% of the excessover $8,255Over $19,571 but notover $30,888$308.87 plus 4% of the excessover $19,571Over $30,888 but notover $42,878$761.55 plus 6% of the excessover $30,888Over $42,878 but notover $54,191$1,480.95 plus 8% of the excessover $42,878Over $54,191 but notover $75,000$2,385.99 plus 8.8% of the excessover $54,191If the taxable income is: | The tax is: |
Not over $8,479 | 1% of the taxable income |
Over $8,479 but not over $20,102 |
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Over $20,102 but not over $31,727 |
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Over $31,727 but not over $44,041 |
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Over $44,041 but not over $55,661 |
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Over $55,661 but not over $75,000 |
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(B)For purposes of applying subdivision (h) to annually recompute the income tax brackets prescribed in subparagraph (A), January 1, 2019 shall be substituted in lieu of January 1, 1988.
(b)(1)There shall be imposed for each taxable year upon the taxable income of every nonresident or part-year resident, except the head of a household as defined in Section 17042, a tax as calculated in paragraph (2).
(2)The tax imposed under paragraph (1) shall be calculated by multiplying the taxable income of a nonresident or part-year resident, as defined in subdivision (i), by a rate (expressed as a percentage) equal to the tax computed under subdivision (a) on the entire taxable income of the nonresident or part-year resident as if the nonresident or part-year resident were a resident of this state for the taxable year and as if the nonresident or part-year resident were a resident of this state for all prior taxable years for any carryover items, deferred income, suspended losses, or suspended deductions, divided by the amount of that income.
(c)(1)There shall be imposed for each taxable year upon the entire taxable income of every resident of this state who is not a part-year resident for that taxable year, when the resident is the head of a household, as defined in Section 17042, taxes in the following amounts and at the following rates upon the amount of taxable income computed for the taxable year as if the resident were a resident of the state for the entire taxable year and for all prior taxable years for carryover items, deferred income, suspended losses, or suspended deductions:
If the taxable income is: | The tax is: |
Not over $7,300 | 1% of the taxable income |
Over $7,300 but not over $17,300 |
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Over $17,300 but not over $22,300 |
|
Over $22,300 but not over $27,600 |
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Over $27,600 but not over $32,600 |
|
Over $32,600 | $1,191 plus 9.3% of the excess |
If the taxable income is: | The tax is: |
Not over $7,300 | 1% of the taxable income |
Over $7,300 but not over $17,300 |
|
Over $17,300 but not over $22,300 |
|
Over $22,300 but not over $27,600 |
|
Over $27,600 but not over $32,600 |
|
Over $32,600 | $1,191 plus 9.3% of the excess |
(2)(A)For taxable years beginning on or after January 1, 2018, the income tax brackets and rates set forth in paragraph (1) shall be replaced with the following for taxable incomes not over one hundred thousand dollars ($100,000), as annually adjusted pursuant to this section:
If the taxable income is:The tax is:Not over $16,5211% of the taxable incomeOver $16,521 but notover $39,142$165.21 plus 2% of the excessover $16,521Over $39,142 but notover $50,459$617.63 plus 4% of the excessover $39,142Over $50,459 but notover $62,449$1,070.31 plus 6% of the excessover $50,459Over $62,449 but notover $73,764$1,789.71 plus 8% of the excessover $62,449Over $73,764 but notover $100,000$2,694.91 plus 8.8% of the excessover $73,764If the taxable income is: | The tax is: |
Not over $16,969 | 1% of the taxable income |
Over $16,969 but not over $40,205 |
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Over $40,205 but not over $51,829 |
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Over $51,829 but not over $64,143 |
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Over $64,143 but not over $75,765 |
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Over $75,765 but not over $100,000 |
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(B)For purposes of applying subdivision (h) to annually recompute the income tax brackets prescribed in subparagraph (A), January 1, 2019 shall be substituted in lieu of January 1, 1988.
(d)(1)There shall be imposed for each taxable year upon the taxable income of every nonresident or part-year resident when the nonresident or part-year resident is the head of a household, as defined in Section 17042, a tax as calculated in paragraph (2).
(2)The tax imposed under paragraph (1) shall be calculated by multiplying the taxable income of a nonresident or part-year resident, as defined in subdivision (i), by a rate (expressed as a percentage) equal to the tax computed under subdivision (c) on the entire taxable income of the nonresident or part-year resident as if the nonresident or part-year resident were a resident of this state for the taxable year and as if the nonresident or part-year resident were a resident of this state for all prior taxable years for any carryover items, deferred income, suspended losses, or suspended deductions, divided by the amount of that income.
(e)There shall be imposed for each taxable year upon the taxable income of every estate, trust, or common trust fund taxes equal to the amount computed under subdivision (a) for an individual having the same amount of taxable income.
(f)The tax imposed by this part is not a surtax.
(g)(1)Section 1(g) of the Internal Revenue Code, relating to certain unearned income of children taxed as if parents income, shall apply, except as otherwise provided.
(2)Section 1(g)(7)(B)(ii)(II) of the Internal Revenue Code is modified, for purposes of this part, by substituting 1 percent for 10 percent.
(h)For each taxable year beginning on or after January 1, 1988, the Franchise Tax Board shall recompute the income tax brackets prescribed in subdivisions (a) and (c). That computation shall be made as follows:
(1)The California Department of Industrial Relations shall transmit annually to the Franchise Tax Board the percentage change in the California Consumer Price Index for all items from June of the prior calendar year to June of the current calendar year, no later than August 1 of the current calendar year.
(2)The Franchise Tax Board shall do both of the following:
(A)Compute an inflation adjustment factor by adding 100 percent to the percentage change figure that is furnished pursuant to paragraph (1) and dividing the result by 100.
(B)Multiply the preceding taxable year income tax brackets by the inflation adjustment factor determined in subparagraph (A) and round off the resulting products to the nearest one dollar ($1).
(i)(1)For purposes of this part, the term taxable income of a nonresident or part-year resident includes each of the following:
(A)For any part of the taxable year during which the taxpayer was a resident of this state (as defined by Section 17014), all items of gross income and all deductions, regardless of source.
(B)For any part of the taxable year during which the taxpayer was not a resident of this state, gross income and deductions derived from sources within this state, determined in accordance with Article 9 of Chapter 3 (commencing with Section 17301) and Chapter 11 (commencing with Section 17951).
(2)For purposes of computing taxable income of a nonresident or part-year resident under paragraph (1), the amount of any net operating loss sustained in any taxable year during any part of which the taxpayer was not a resident of this state shall be limited to the sum of the following:
(A)The amount of the loss attributable to the part of the taxable year in which the taxpayer was a resident.
(B)The amount of the loss which, during the part of the taxable year the taxpayer is not a resident, is attributable to California source income and deductions allowable in arriving at taxable income of a nonresident or part-year resident.
(3)For purposes of computing taxable income of a nonresident or part-year resident under paragraph (1), any carryover items, deferred income, suspended losses, or suspended deductions shall only be includable or allowable to the extent that the carryover item, deferred income, suspended loss, or suspended deduction was derived from sources within this state, calculated as if the nonresident or part-year resident, for the portion of the year he or she was a nonresident, had been a nonresident for all prior years.
SEC. 3.This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
This act shall be known, and may be cited, as the Middle Class Tax Relief Act.
SEC. 2.Section 17041 of the Revenue and Taxation Code is amended to read:17041.(a)(1)There shall be imposed for each taxable year upon the entire taxable income of every resident of this state who is not a part-year resident, except the head of a household as defined in Section 17042, taxes in the following amounts and at the following rates upon the amount of taxable income computed for the taxable year as if the resident were a resident of this state for the entire taxable year and for all prior taxable years for any carryover items, deferred income, suspended losses, or suspended deductions:
If the taxable income is: | The tax is: |
Not over $3,650 | 1% of the taxable income |
Over $3,650 but not over $8,650 |
|
Over $8,650 but not over $13,650 |
|
Over $13,650 but not over $18,950 |
|
Over $18,950 but not over $23,950 |
|
Over $23,950 | $1,054.50 plus 9.3% of the excess |
(2)(A)For taxable years beginning on or after January 1, 2018, the income tax brackets and rates set forth in paragraph (1) shall be replaced with the following for taxable incomes not over seventy-five thousand dollars ($75,000), as annually adjusted pursuant to this section:
If the taxable income is: | The tax is: |
Not over $8,255 | 1% of the taxable income |
Over $8,255 but not over $19,571 |
|
Over $19,571 but not over $30,888 |
|
Over $30,888 but not over $42,878 |
|
Over $42,878 but not over $54,191 |
|
Over $54,191 but not over $75,000 | $2,385.99 plus 8.8% of the excess |
(B)For purposes of applying subdivision (h) to annually recompute the income tax brackets prescribed in subparagraph (A), January 1, 2019 shall be substituted in lieu of January 1, 1988.
(b)(1)There shall be imposed for each taxable year upon the taxable income of every nonresident or part-year resident, except the head of a household as defined in Section 17042, a tax as calculated in paragraph (2).
(2)The tax imposed under paragraph (1) shall be calculated by multiplying the taxable income of a nonresident or part-year resident, as defined in subdivision (i), by a rate (expressed as a percentage) equal to the tax computed under subdivision (a) on the entire taxable income of the nonresident or part-year resident as if the nonresident or part-year resident were a resident of this state for the taxable year and as if the nonresident or part-year resident were a resident of this state for all prior taxable years for any carryover items, deferred income, suspended losses, or suspended deductions, divided by the amount of that income.
(c)(1)There shall be imposed for each taxable year upon the entire taxable income of every resident of this state who is not a part-year resident for that taxable year, when the resident is the head of a household, as defined in Section 17042, taxes in the following amounts and at the following rates upon the amount of taxable income computed for the taxable year as if the resident were a resident of the state for the entire taxable year and for all prior taxable years for carryover items, deferred income, suspended losses, or suspended deductions:
If the taxable income is: | The tax is: |
Not over $7,300 | 1% of the taxable income |
Over $7,300 but not over $17,300 |
|
Over $17,300 but not over $22,300 |
|
Over $22,300 but not over $27,600 |
|
Over $27,600 but not over $32,600 |
|
Over $32,600 | $1,191 plus 9.3% of the excess |
If the taxable income is: | The tax is: |
Not over $7,300 | 1% of the taxable income |
Over $7,300 but not over $17,300 |
|
Over $17,300 but not over $22,300 |
|
Over $22,300 but not over $27,600 |
|
Over $27,600 but not over $32,600 |
|
Over $32,600 | $1,191 plus 9.3% of the excess |
(2)(A)For taxable years beginning on or after January 1, 2018, the income tax brackets and rates set forth in paragraph (1) shall be replaced with the following for taxable incomes not over one hundred thousand dollars ($100,000), as annually adjusted pursuant to this section:
If the taxable income is: | The tax is: |
Not over $16,521 | 1% of the taxable income |
Over $16,521 but not over $39,142 |
|
Over $39,142 but not over $50,459 |
|
Over $50,459 but not over $62,449 |
|
Over $62,449 but not over $73,764 |
|
Over $73,764 but not over $100,000 | $2,694.91 plus 8.8% of the excess |
(B)For purposes of applying subdivision (h) to annually recompute the income tax brackets prescribed in subparagraph (A), January 1, 2019 shall be substituted in lieu of January 1, 1988.
(d)(1)There shall be imposed for each taxable year upon the taxable income of every nonresident or part-year resident when the nonresident or part-year resident is the head of a household, as defined in Section 17042, a tax as calculated in paragraph (2).
(2)The tax imposed under paragraph (1) shall be calculated by multiplying the taxable income of a nonresident or part-year resident, as defined in subdivision (i), by a rate (expressed as a percentage) equal to the tax computed under subdivision (c) on the entire taxable income of the nonresident or part-year resident as if the nonresident or part-year resident were a resident of this state for the taxable year and as if the nonresident or part-year resident were a resident of this state for all prior taxable years for any carryover items, deferred income, suspended losses, or suspended deductions, divided by the amount of that income.
(e)There shall be imposed for each taxable year upon the taxable income of every estate, trust, or common trust fund taxes equal to the amount computed under subdivision (a) for an individual having the same amount of taxable income.
(f)The tax imposed by this part is not a surtax.
(g)(1)Section 1(g) of the Internal Revenue Code, relating to certain unearned income of children taxed as if parents income, shall apply, except as otherwise provided.
(2)Section 1(g)(7)(B)(ii)(II) of the Internal Revenue Code is modified, for purposes of this part, by substituting 1 percent for 10 percent.
(h)For each taxable year beginning on or after January 1, 1988, the Franchise Tax Board shall recompute the income tax brackets prescribed in subdivisions (a) and (c). That computation shall be made as follows:
(1)The California Department of Industrial Relations shall transmit annually to the Franchise Tax Board the percentage change in the California Consumer Price Index for all items from June of the prior calendar year to June of the current calendar year, no later than August 1 of the current calendar year.
(2)The Franchise Tax Board shall do both of the following:
(A)Compute an inflation adjustment factor by adding 100 percent to the percentage change figure that is furnished pursuant to paragraph (1) and dividing the result by 100.
(B)Multiply the preceding taxable year income tax brackets by the inflation adjustment factor determined in subparagraph (A) and round off the resulting products to the nearest one dollar ($1).
(i)(1)For purposes of this part, the term taxable income of a nonresident or part-year resident includes each of the following:
(A)For any part of the taxable year during which the taxpayer was a resident of this state (as defined by Section 17014), all items of gross income and all deductions, regardless of source.
(B)For any part of the taxable year during which the taxpayer was not a resident of this state, gross income and deductions derived from sources within this state, determined in accordance with Article 9 of Chapter 3 (commencing with Section 17301) and Chapter 11 (commencing with Section 17951).
(2)For purposes of computing taxable income of a nonresident or part-year resident under paragraph (1), the amount of any net operating loss sustained in any taxable year during any part of which the taxpayer was not a resident of this state shall be limited to the sum of the following:
(A)The amount of the loss attributable to the part of the taxable year in which the taxpayer was a resident.
(B)The amount of the loss which, during the part of the taxable year the taxpayer is not a resident, is attributable to California source income and deductions allowable in arriving at taxable income of a nonresident or part-year resident.
(3)For purposes of computing taxable income of a nonresident or part-year resident under paragraph (1), any carryover items, deferred income, suspended losses, or suspended deductions shall only be includable or allowable to the extent that the carryover item, deferred income, suspended loss, or suspended deduction was derived from sources within this state, calculated as if the nonresident or part-year resident, for the portion of the year he or she was a nonresident, had been a nonresident for all prior years.
SEC. 3.This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
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Date
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Status
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|---|---|
| May 14, 2018 | May 16 set for first hearing canceled at the request of author. |
| May 8, 2018 | Set for hearing May 16. |
| May 3, 2018 | May 9 hearing postponed by committee. |
| May 2, 2018 | Set for hearing May 9. |
| Mar 22, 2018 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on GOV. & F. |
| Mar 1, 2018 | Referred to Com. on GOV. & F. |
| Feb 16, 2018 | From printer. May be acted upon on or after March 18. |
| Feb 15, 2018 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
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Bill Author
Bill Co-Author(s):