SB0133 and HB 0148 – Local Tax Relief for Working Families Act of 2021 

Both bills have passed in their respective House of origin and moved to the opposite chamber.

These bills will be applicable to all taxable years beginning after December 31, 2021.

They authorize local governments to impose the county income tax on a bracket basis. Local governments imposing the local tax on a bracket basis are authorized to impose a maximum tax rate of 3.5% and requires local governments to impose a minimum tax rate of 2.25%.

A county that imposes the county income tax on a bracket basis must (1) set, by ordinance or resolution, the income brackets that apply to each tax rate and (2) inform the Comptroller by July 1 prior to the year in which a new bracket is established.

A county may )1) apply a higher or equal tax rate to a higher income bracket than a rate applied to a lower income tax rate but may not apply a lower rate; (2) establish income brackets that differ from the State income brackets; and (3) request information from the Comptroller to assist the county in determining rates that are revenue neutral.  However, any rate changes are not required to be revenue neutral.

A county income tax rate in excess of 3.2% may only be imposed on incomes that are twice as great as the income bracket to which the highest individual and married filing joint returns apply.  This currently translates to the local income tax rate applying to net taxable income of $500,000 for an individual and $600,000 for married filing joint returns.

Currently, 12 local governments have a local income rate below 3.20%