Bullock, who arrived from Hartlepool initially on loan in January 2008, is one of several senior Bantams players yet to sign their new contracts, but the 33-year-old has told the club he wants to stay.
Manager Stuart McCall said: "We're really pleased that he's signing and believe he can have a good season if he keeps clear of injury.
"We also know the finances at the club now and Bully was happy to take his drop. There was no umming and ahhing about it because he wants to play for this club and be involved."
McCall added: "He's the type of player that sometimes goes unnoticed, but he's strong in both boxes. And he's one from midfield who can get you six to eight goals in a season."
Bullock's team-mates Matt Clarke, Joe Colbeck, Luke O'Brien and Leon Osborne must decide by the end of this week if they will also be accepting new terms.