Taxation; numerous changes to the Commonwealth's tax structure.

Taxation in the Commonwealth. Makes numerous changes to the Commonwealth's tax structure. The bill provides that the standard deduction for individual income taxes shall be set permanently at $4,500 for individuals and $9,000 for married persons. Under current law, the standard deduction is scheduled to revert to $3,000 and $6,000, respectively, beginning with taxable year 2026. Beginning with taxable year 2022, individual income tax brackets, the filing threshold, the amount of the standard deduction, and the amount of personal exemptions shall be adjusted on an annual basis in accordance with the yearly change in the Chained Consumer Price Index for All Urban Consumers (C-CPI-U). The bill imposes the retail sales and use tax on digital personal property, defined in the bill as a digital product delivered electronically that the purchaser owns or has the ability to continually access without having to pay an additional subscription or usage fee to the seller after paying the initial purchase price. The bill also applies the retail sales and use tax to the following services: admissions; charges for recreation, fitness, or sports facilities; nonmedical personal services or counseling; dry cleaning and laundry services; companion animal care; residential home repair or maintenance, landscaping, or cleaning services when paid for directly by a resident or homeowner; vehicle and engine repair; repairs or alterations to tangible personal property; storage of tangible personal property; delivery or shipping services; travel, event, and aesthetic planning services; and communications services that are not subject to the communications sales and use tax and are not digital personal property. Certain exemptions are provided to the sales and use tax on services, including health care services that must be performed by a person licensed or certified by the Department of Health Professions, veterinary services, professional services, Internet access services, and services provided by a person who does not receive more than $2,500 per year in gross receipts for performance of such services. The bill exempts services purchased by a nonprofit organization and services purchased by a homeowners' association or by a landlord for the benefit of his tenant. The bill also repeals the service exemptions currently provided for the sale of custom programs and modification of prewritten programs. The bill imposes the communications sales and use tax on prepaid calling services and on digital subscription services, defined in the bill as services for which the user pays in order to access and use software, reading materials, or other digital data or applications for a defined period of time, which products the user does not own or have permanent access to outside of such period of time. The bill provides that a portion of the income tax credit for low-income taxpayers who are residents of the Commonwealth shall be refundable. Under current law, eligible taxpayers may claim either (i) a nonrefundable income tax credit equal to $300 for each individual, his spouse, and any dependents or (ii) an income tax credit equal to 20 percent of the federal earned income tax credit. For taxpayers claiming the credit referenced in clause (ii), 50 percent of the value of the credit would be refundable in taxable year 2021, and the refundable portion would increase by five percent each year, becoming fully refundable starting in taxable year 2031. Nonresident taxpayers and resident taxpayers claiming the credit referenced in clause (i) shall not be eligible for a refundable credit. The bill also exempts food purchased for human consumption and essential personal hygiene products (the grocery tax) from all state and regional sales taxes and that, beginning July 1, 2022, food purchased for human consumption and essential personal hygiene products are also exempt from the local sales tax, and the grocery tax is eliminated.