The Tax Reform and Relief Legislative Task Force is considering the repeal of a home-office tax credit, which life, health, and disability insurers have used for decades against their insurance premium taxes.
By cutting the home-office tax credit, the state would bring in an additional $40 million in taxes per year.
As reported by the Arkansas Democrat Gazette, Sen. Jim Hendren stated that the task force has three options: recommend no change; repeal the credit and use the savings to reduce the insurance premium tax rate of 2.5 percent; or repeal the home-office tax credit entirely to finance the proposed reduction of the state’s top individual income tax rate of 6.9 percent.
Sen. Hendren went on to state that there may be room for compromise. “I think the industry may have some willingness to work some sort of compromise out somewhere between elimination of it and doing nothing.”
The largest credit in 2017 went to USAble Mutual Insurance Co. doing business as Arkansas Blue Cross and Blue Shield, at $21.5 million. Trailing behind were HMO Partners Inc. at $5.6 million and Delta Dental Plan of Arkansas Inc. at $2.5 million.