Proposal would raise top tax rates and fund school aid

The proposal would set higher tax rates at specified income levels for individuals and businesses. For individuals, the proposed top bracket starts at $750,000 for single filers, $1 million for married couples filing jointly, and $500,000 for married people filing separately. A corporate and pass-through entity bracket would start at $1 million. The proposed corporate and pass-through entity bracket would apply to income of at least $1 million. The proposed rates apply for taxable year 2025; the higher rates apply to taxable years beginning after December 31, 2025.

The state would transfer money linked to the proposed tax rates into a school aid fund, and the Department of Public Instruction would distribute it to school districts. Each district's share would be based on its portion of the statewide school property tax levy in the 2024–25 school year. The Department of Revenue would determine annually how much tax revenue the proposed rate changes raised; that amount would be transferred from the general fund. Transfers would begin in fiscal year 2025–26, and the Department of Public Instruction would distribute the aid annually.

The proposal would count some students as more than one pupil in school aid and district revenue limit calculations. The proposed weights apply to low-income students and students with limited English proficiency when calculating general school aid and district revenue limits. A student meeting both descriptions would count as 1.4 pupils. Low-income status uses federal free or reduced-price lunch criteria; limited English proficiency means the student has difficulty doing ordinary classwork in English because of limited English ability.

The state would reimburse 90% of certain eligible education costs. Eligible costs include special education and related services for children with disabilities, and school-age parent programs. Covered providers include school boards, independent charter school operators, cooperative educational service agencies, and county children with disabilities education boards. The state would first pay the full cost of special education for children in hospitals and convalescent homes for children with orthopedic disabilities. The 90% rate would apply to remaining eligible costs. The proposed 90% rate would begin in the 2025–26 school year.