income tax; eliminate
marriage penalty
As introduced, HB 2616 creates a new individual
income tax filing bracket and standard deduction for married filing joint with
at least one dependent and allows a state adjustment for capital gain losses
for married filing joint returns. The proposed strike-everything amendment
will increase the standard deduction for individual income tax filers.
For
those filers who do not itemize their deductions, Arizona provides a standard
deduction as follows:
Single/Married Filing Separate $3,600
Married Filing Joint/Head of
Household $7,200
The proposed strike everything amendment will
increase the standard deduction. The
proposed increases will reduce income tax revenues by approximately $50 million
per year for an impact of $100 million during the 2001-2003 biennial budget
cycle. According to DOR, this will have
the effect of reducing the tax liability for those with a federal adjusted
gross income (FAGI) of $10,000 or less by approximately 70%. For filers with a FAGI between $10,000 and
$20,000 the reduction in liability is approximately 20%, for filers with a FAGI
between $20,000 and $25,000 the effect will result in a 16% reduction. Anyone with a FAGI between $25,000 and
$30,000 will have an estimated 11.6% reduction in tax liability. Filers between $30,000 and $40,000 FAGI will
see approximately a 7.8% reduction and all other filers will see either small decreases
or no decreases, depending on whether they itemize or use the new standard
deduction.