SB 146 - This act creates a corporate income tax exemption for business income and phases it in over a five-year period. For the 2011 tax year, corporations will be allowed to exempt ten percent of business income from corporate income tax. Once fully phased-in, corporations will be allowed to exempt fifty percent of business income from corporate income tax 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.