State House passes tax break bill

State House passes tax break bill

This week the House voted in favor of a tax cut which would lower taxes for more than 650,000 Arkansans. This includes 120,000 Arkansans who will no longer pay state income tax.

HB1159 reduces state income tax for anyone making less than $21,000.

Income in Arkansas is taxed in brackets. Below is a breakdown of how HB1159 would lower the rates.

Individuals earning $4,299 or less would see their tax rate reduced from 0.90% to 0.00%, resulting in a net revenue reduction of $22.28 million. Individuals earning between $4,300 and $8,399 would see their tax rate reduced from 2.40% to 2.00%, resulting in a net revenue reduction of $7.5 million. Individuals earning between $8,400 and $12,599 would see their tax rate reduced from 3.40% to 3.00%, resulting in a net revenue reduction of $5.61 million. And those earning between $12,600 and $20,999 would see their tax rate reduced from 4.40% to 3.40%, resulting in a net revenue reduction of $10.89 million.

It is projected this bill will have a $50 million impact on the state budget. It becomes effective on Jan. 1, 2019.

Another important element of this bill is the task force it creates.

The Tax Reform and Relief Legislative Task force will have 16 members. They will be appointees by the Speaker of the House, Senate President Pro-Tem, Senate Majority and Minority Leaders, and the House Majority and Minority Leaders.

If this bill passes, the task force will hold its first meeting within 30 days of adjournment of this session.

The purpose of the task force is to examine and identify areas of potential reform within the tax laws of the State of Arkansas.

They will be asked to recommend legislation to the General Assembly for consideration during 2019 regular session in order to:

• Modernize and simplify the Arkansas tax code.

• Make the Arkansas tax laws competitive with other 36 states in order to attract businesses to the state.

• Create jobs for Arkansans

• Ensure fairness to all individuals and entities 3 impacted by the tax laws of the State of Arkansas.

The task is to make a preliminary report to the Governor, Speaker, and Senate President Pro Tempore by December of this year. The final report is due on Sept. 1, 2018.

HB1159 is heading to the Senate floor this week.

I will continue to update you weekly. Remember you can watch all House floor proceedings and committees held in the Capitol at www.arkansashouse.org.

From State Representative Deborah Ferguson