An act relating to an elective pass-through entity income tax and credit

This bill creates an optional income tax that pass-through businesses like S corporations and partnerships can choose to pay instead of having their owners pay individual income tax on the business income. The tax is calculated based on each owner's share of the business income and uses the state's second-highest individual income tax rate. If a business elects to pay this tax, each owner receives a refundable credit equal to 90% of the tax paid, which can reduce their individual income tax liability. The bill also allows owners to claim a credit for similar taxes paid to other states, and it applies retroactively to taxable years beginning on or after January 1, 2023.