TO CREATE THE INFLATION REDUCTION ACT OF 2025.

Fiscal Impact Statement Bill: HB1065 Bill Subtitle: TO CREATE THE INFLATION REDUCTION ACT OF 2025. --------------------------------------------------------------------------------------------------------------------------------------- Sponsors: Rep. Ray and Sen. Dismang Basic Change: HB1065 creates the Inflation Reduction Act of 2025 to repeal the cap on annual inflation adjustments to the individual income tax tables and standard deduction. Under §§ 26-51-201 and -430, the Department of Finance and Administration (DFA) annually adjusts both the individual income tax tables and the standard deduction based on increases in the Consumer Price Index (CPI) for All Urban Consumers. However, the inflation adjustment in any single year cannot exceed 3%. Under HB1065, the 3% cap is repealed, and the annual inflation adjustment would be based on the CPI for the West South Central Division of the South Region instead of the CPI for All Urban Consumers. HB1065 is effective for tax years beginning on or after January 1, 2025. Fiscal Impact: FY2026 – $3M General Revenue Reduction [ The fiscal impact is based on the historical CPI used to adjust the brackets over the past 10 years if no cap woul