House Bill 1088 Summary

• Allows counties to impose an additional income tax rate up to 0.5% to reduce all property tax levies through property tax replacement credits, with combined county and municipal rates not exceeding 1%.

• Authorizes municipalities located in eligible counties to adopt a municipal option income tax to provide property tax relief through levy freezes, property tax replacement credits, homestead credits, or residential property credits.

• Requires municipalities adopting the tax to hold at least one public hearing before adoption and mandates the Department of State Revenue report municipal option income tax revenue quarterly to fiscal officers.

• Establishes a municipal option income tax rate capped at the lesser of the county's additional rate or 0.5%, with combined municipal and county rates not exceeding 1%.

• Requires taxpayers on adjusted gross income tax returns beginning in 2012 to identify their city or town of principal residence to facilitate municipal income tax administration and distribution.