Recommended Rate Changes (Option E2 in Appendix S)
Tax Study Commission recommended a two-bracket tax structure with the higher rate equal to the current top rate
- 5.0% on first $50,000 of taxable income
- 5.75% on amounts above $50,000
$125 personal credit is equivalent to a $2,500 personal exemption at the first-bracket rate of 5% – takes tax off first dollars
Larger tax-free amounts generally more than offset the elimination of the first two brackets of the current tax