Governor Asa Hutchinson’s income tax relief package was approved by the Arkansas Legislature. Tax relief is needed in Arkansas.
Some have called the income tax relief the largest in history but the tax relief package won’t be fully implemented for several years and some provisions only become effective if future conditions are met. Obviously, we are pleased with the passage of tax relief yet disappointed there was not more considering the massive net tax increases passed in 2019 and considering the recent billion dollar surplus in general revenues.
The tax relief was filed as identical House and Senate Bills SB1 and HB1001. The key provision is a gradual cutting of the top individual income tax rate from 5.9% to 4.9% in 2025. The bill also provides corporate income tax cuts and a low-income tax credit.
With some of the tax relief being delayed for years, now the legislature must be vigilant in coming years in protecting those cuts while waiting for them to become effective.
Legislators who were serving in 2015 still remember how Governor Hutchinson insisted on taking away capital gains tax relief passed in 2013 and was just becoming effective in 2015. The legislature agreed to take away the capital gains tax relief . This caused an uproar in the business community and late in the 2015 session the legislature passed legislation to restore part of the capital gains relief for 2015 and restored the full relief beginning in 2016.
Even with the tax relief that just passed, Arkansas remains one of the highest tax states in the nation. So encourage your legislators to continue working on lowering taxes and reining in spending. Much work is still needed but and it can only happen if voters are insistent.