Gov. Sarah Huckabee Sanders called for a special session of the Arkansas general assembly to begin Monday, June 17, 2024. Her proclamation set the agenda for items to include:
- Income and corporate tax cuts
- Increase in the homestead property tax credit
- Appropriations for the Arkansas Game and Fish Commission.
The legislation was heard in the House and Senate this week, with an adjournment on Wednesday, June 19.
SB1/HB1001 – Income and Corporate Tax Cuts – Sen. Jonathan Dismang & Rep. Les Eaves
This bill reduces the top income tax rate in Arkansas from 4.4% to 3.9%, retroactively applied beginning January 1, 2024. This will result in a reduction in tax collections of an estimated $384.2 million in FY2025. The new tax brackets for individual income tax rates will be as follows:
- $0 – $5,299 : 0%
- $5,300 – $10,599: 2%
- $10,600 – $15,099: 3%
- $15,100 – $24,999: 3.4%
- $25,000 – $89,600+: 3.9%
The bill cuts the top rate of the corporation income tax down from 4.8% to 4.3%, retroactively applied beginning January 1, 2024. This will result in tax collections of an estimated $99.3 million for FY2025. The new tax brackets for corporate income tax rates will be as follows:
- $0 – $3,000: 1%
- $3,001 – $6,000: 2%
- $6,001 – $11,000: 3%
- $11,000+: 4.3%
The legislation would also move $290 million from the General Revenue Allotment Reserve Fund to the Arkansas Reserve Fund Set Aside.
SB2 – Arkansas Game and Fish Association Appropriation Bill – Sen. Jonathan Dismang & Rep. Lane Jean
The general assembly failed to pass a funding appropriation for the Arkansas Game and Fish Association for the new fiscal year during the recent fiscal session, leaving the agency without ongoing funding to operate. The sticking point was the proposed $190,000 salary for the director, Austin Booth. SB2 places the salary cap at just over $170,000. However, legislation passed during the fiscal session giving approval for massive increases to government workers for retention and recruitment, and additional direction by the Governor should increase the proposed cap in the legislation to reach roughly the $190,000 total first requested for the director.
SB3 – Homestead Property Tax Credit Increase – Sen. Steve Crowell & Rep. Howard Schulz
This bill increases the homestead property tax credit amount to $500 from its current rate of $425. This credit may be applied by property owners against the amount of their levied property taxes on their personal residence property. The reduction is estimated to be $46 million in FY2025. This amount will be made up with a state current sales tax charged and used to offset the increased credit, providing funds back to counties for their portion of lost revenue due to the increased credit. The legislation also requires a new annual report showing the potential for the funding of future increases in the homestead property tax credit based on revenue collected under the sales tax.
In total, this special session will see an estimated $529.5 million in tax cuts. After small tax cuts, largely offset with corresponding tax increases under Gov. Asa Hutchinson, Gov. Sarah Huckabee Sanders and the general assembly are providing true tax relief to Arkansans through this session and past sessions of direct income tax cuts and restructuring of the tax code.
Conduit for Action fully supports these tax cut measures and is encouraged to see continuous conservative fiscal efforts made by the governor and legislators.
