Ways and Means Education Committee advances four tax bills, including grocery tax cut acceleration

The Ways and Means Education Committee on a committee motion gave favorable reports to four tax bills that would accelerate a scheduled grocery-tax reduction, allow local governments more flexibility to cut local food sales taxes, increase a retirement-withdrawal exemption for residents 65 and older, and raise several adjusted gross income and standard-deduction thresholds.

The measures discussed were House Bill 386, which would accelerate the 1-cent grocery tax reduction to Sept. 1, 2025; HB 387, which would let local governments reduce their local sales tax on food by ordinance or resolution without being constrained by local revenue-growth limits; HB 388, which would raise the defined-contribution retirement withdrawal exemption for people 65 and older from $6,000 to $12,000 per person; and HB 389, a package of income-tax threshold and standard-deduction increases. Committee members said the four bills together carry a fiscal note of roughly $191,200,000 in total tax reduction.

Why it matters: The bills would reduce tax liabilities for a range of residents and alter the degree of local control over food-sales taxes. Committee members described the package as measures that reduce the tax burden for retirees and households at specified adjusted gross income levels.

HB 386: Grocery tax reduction acceleration The committee discussed a technical amendment to HB 386 that replaces specific language on page 8, line 199 and inserts clarifying words on page 11, line 282 to refer to the percent of the gross proceeds of the sale on food and the sales price of such food. Representative Drummond offered the amendment; Representative Collins seconded. The amendment was approved by voice vote. Representative Kiel then moved to report the bill favorably; Representative Faulkner seconded. The committee approved the motion by voice vote. The bill, as described to the committee, would accelerate the 1-cent grocery tax reduction to take effect Sept. 1, 2025.

HB 387: Local authority to reduce food sales taxes HB 387 would remove a provision that had limited local governments to reducing their local grocery-sales tax by 0.25 percentage point in a year when their revenue grew 2 percent. Under the bill discussed, local governments could reduce their local sales tax on food by resolution or ordinance irrespective of growth in their general funds. Committee discussion noted that the change removes that annual cap and grants broader discretion to local jurisdictions. The committee gave the bill a favorable report by voice vote.

HB 388: Retirement-withdrawal exemption increase HB 388 would double the existing exemption for withdrawals from a defined-contribution retirement plan for taxpayers age 65 and older, raising the exemption from $6,000 to $12,000 per person (from $12,000 to $24,000 per couple). Representative Collins spoke in support: "I thought this is an excellent bill, and I really appreciate you thinking about it, and I think it makes a big difference, especially for our retirees that are not on the defined benefit plan." Representative Foner moved to report the bill favorably; Representative Drummond seconded. The committee approved the motion by voice vote.

HB 389: AGI thresholds and standard-deduction increases HB 389 would make several changes to eligibility thresholds and amounts for dependent exemptions and optional standard deductions. The committee was told the bill would: raise the adjusted gross income (AGI) floor for claiming the $1,000 dependent exemption from $50,000 to $60,000; raise the AGI cap for the existing $500 dependent exemption from $100,000 to $120,000; raise AGI floors and minimum/maximum amounts for optional standard deductions across filing statuses (married filing jointly, married filing separately, head of family and single), with specific increases described to the committee. Representative Lovell offered the bill for a favorable report; Representative Wood seconded. The committee approved the bill by voice vote.

Votes at a glance - HB 386 (accelerate 1¢ grocery tax cut to Sept. 1, 2025): Amendment offered by Representative Drummond and seconded by Representative Collins; amendment approved by voice vote. Motion to report favorably moved by Representative Kiel and seconded by Representative Faulkner; committee approved by voice vote. - HB 387 (allow local governments to reduce local food sales tax by ordinance/resolution regardless of revenue-growth limits): Reported favorably by the committee (voice vote); no individual named roll-call tally recorded. - HB 388 (increase defined-contribution withdrawal exemption for taxpayers 65+ from $6,000 to $12,000 per person): Motion to report favorably moved by Representative Foner and seconded by Representative Drummond; approved by voice vote. Representative Collins spoke in support. - HB 389 (raise AGI thresholds and optional standard-deduction amounts): Motion to report favorably moved by Representative Lovell and seconded by Representative Wood; approved by voice vote.

Procedural and fiscal notes Committee discussion and motions occurred by voice vote; no roll-call tallies with individual member votes were recorded in the meeting transcript. The committee reported that the combined fiscal impact of the four measures is approximately $191,200,000 in tax reduction.

The committee meeting concluded after the favorable reports were recorded.