The State’s House and Senate Revenue and Taxation committees advanced identical bills that would slice the state’s top individual income tax rate from 4.4 percent to 3.9 percent and the state’s top corporate income tax rate from 4.8 percent to 4.3 percent, retroactive to January 1 this year.
These cuts would reduce the states general revenue by a cumulative $483.5 million in fiscal year 2025, which begins July 1, and by $322.2 million each fiscal year afterward, according to the state Department of Finance and Administrations fiscal impact report on Senate Bill 1 and House Bill 1001.
The committees also passed Senate Bill 3 and House Bill 1002, which propose increasing the homestead property tax credit from $425 to $500. Lawmakers previously increased the tax credit from $375 to $425 during the 2023 legislative session.
The Arkansas Democrat Gazette reports that the tax bill cuts would also transfer $290 million in state general revenue surplus funds to the Arkansas Reserve Fund.
The special session remains underway. Both SB1 and HB1001 have emergency clauses, meaning they would go into effect immediately upon Governor Sarah Huckabee Sanders signature. If they become law, corporate income tax rates will have decreased by 2.8% and individual income tax rates by 1% since April of last year.
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