On February 8, 2024, Legislative Director Kevin Kinnally testified before the House Ways and Means Committee in support of HB 470- County Income Tax- Rate and Income Brackets- Alterations. This bill gives counties the necessary tools and flexibility to levy the local income tax with greater equity and fairness.
HB 470 properly allows counties to tailor local revenue structures to serve and react to community needs. In 2021, the General Assembly approved legislation authorizing counties to levy the local income tax on a bracket basis – standard practice for state and federal tax regimes. While some counties have successfully enacted local brackets, others cannot achieve a more equitable system without jeopardizing significant resources for schools, housing, health, public safety, roadway maintenance, and other essential public services.
As such, for counties electing to impose the local income tax on a bracket basis, this bill raises the maximum rate from 3.2% to 3.7% for specified taxpayers. Under the bill, a county may impose a rate higher than 3.2% on income exceeding $250,000 for specified individuals and $300,000 for joint filers. Further, the bill states the General Assembly’s intent for counties to use any revenue attributable to a rate higher than 3.2% to fund public education and transportation.
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