Adjust Tax Expenditures For State Education Fund

Section 1 of the act specifies that the act shall be known as the "Tax Fairness Act".

Sections 2 and 3 of the act require taxpayers to add to federal taxable income:

• For income tax years ending on and after the enactment of the March 2020 "Coronavirus Aid, Relief, and Economic Security Act" (CARES Act), but before January 1, 2021, and for income tax years beginning on and after the enactment of the CARES Act, but before January 1, 2021, an amount equal to the difference between a taxpayer's net operating loss deduction as determined under federal law before the amendments made by section 2303 of the CARES Act and the taxpayer's net operating loss deduction as determined under federal law after the amendments made by section 2303 of the CARES Act;
• For income tax years ending on and after the enactment of the CARES Act, but before January 1, 2021, and for income tax years beginning on and after the enactment of the CARES Act, but before January 1, 2021, an amount equal to a taxpayer's excess business loss as determined under federal law without regard to the amendments made by section 2304 of the CARES Act, but with regard to the technical amendment made in that section of the CARES Act;
• For income tax years ending on and after the enactment of the CARES Act, but before January 1, 2021, and for income tax years beginning on and after the enactment of the CARES Act, but before January 1, 2021, an amount equal to the amount in excess of the limitation on business interest under federal law without regard to the amendments made by section 2306 of the CARES Act; and
• For income tax years commencing on or after January 1, 2021, but before January 1, 2023, an amount equal to the deduction for qualified business income for an individual taxpayer who files a single return and whose adjusted gross income is greater than $500,000, and for an individual taxpayer who files a joint return and whose adjusted gross income is greater than $1 million. This federal deduction may be claimed for income tax years commencing prior to January 1, 2026, except that the add-back is not required for a taxpayer who files a schedule F, profit or loss from farming, or successor form, as an attachment to a federal income tax return.

Section 4 of the act specifies that for net operating losses incurred after December 31, 2017, the 80% limitation set forth in federal law applies without regard to the amendments made in section 2303 of the CARES Act.

The earned income tax credit is equal to a percentage of the federal earned income tax credit. Section 5 of the act increases the percentage from 10% to 15% beginning in 2022. Section 5 also specifies that for income tax years commencing on or after January 1, 2021, taxpayers filing with an individual taxpayer identification number are eligible for the earned income tax credit.

Section 6 of the act specifies that the state treasurer shall transfer $113 million on March 1, 2021, and $23 million on March 1, 2022, from the general fund to the state education fund created in section 17 (4) of article IX of the state constitution.

Section 7 of the act makes an appropriation.

(Note: This summary applies to this bill as enacted.)