SCS/SB 146 - This act reduces the corporate income tax rate from its current six and one-forth percent by ten percent each year over five year period. For the 2011 tax year taxable corporate income will be taxed at five and five-eighths percent. Once fully phased-in, taxable corporate income will be taxed at three and one-eighth percent for the 2015 tax year and all subsequent tax years.
The act also creates an individual income tax deduction for business income and phases it in over a five-year period. Taxpayers will be allowed to deduct ten percent of business income for the 2011 tax year and, once fully phased-in, will be allowed a fifty percent deduction for all tax years after the 2014 tax year. Shareholders of S corporations and partners in partnerships will be allowed a proportional deduction based their share of ownership.