ROCK – The Senate has already approved several large tax cuts this session, and
another one is on its agenda.
Bill 576 will make far-reaching changes in the state corporate income tax code,
to the extent that the Department of Finance and Administration will have to
update its computers from now until 2024 in order to process them.
Senate Revenue and Taxation Committee advanced the bill, which will be
considered soon by the entire Senate.
Fiscal Year 2023, when most of the bill’s provisions are fully in effect, they
will save Arkansas businesses more than $57 million a year.
576 extends a company’s ability to carry forward net operating losses. The
longer carry forward period will gradually extend to 20 years. Now it is five
bill changes how multi-state corporations calculate the Arkansas portion of
their taxable income. Now, they use a formula based on sales, property and
payroll. SB 576 changes the apportionment formula so that it considers only
sales in Arkansas compared to sales everywhere else.
bill also allows more favorable treatment of income when Arkansas firms sell
products to other states, where the receiving state does not levy taxes on
them. Half of those sales will be exempt in 2021 and all income from those
sales will be exempt in 2022.
of the loss of revenue from the tax relief would be offset by collecting sales
tax from remote sellers, which are Internet companies that have no physical
presence in Arkansas.
legislature has already enacted a $97 million income tax cut that lowers the
top marginal rate.
579,000 taxpayers with income of more than $38,200 will have lower taxes.
Senate has passed SB 447 to increase the homestead property tax credit from
$350 to $375, and the bill is awaiting action in House committee.
the thinnest of margins, the Senate approved SB 571 to set up an earned income
tax credit for people with low incomes, and to reduce the income tax rate for
low income taxpayers. It also increase the standard deduction by $1,100, which
helps anyone who claims it.
Senate passed SB 571 by a vote of 18-to-14. In the 35-member Senate, 18 votes
were necessary for passage. The bill has yet to be considered by the House of
lost revenue would be offset by increases in taxes on cigarettes and vaping.
The bill’s sponsors say that revenue from tobacco taxes is much less than the
cost to the state for treating Medicaid patients with tobacco-related
illnesses. The gap is $500 million a year.
House passed HB1342 to raise the threshold for exempting purchases of used cars
from the sales tax. It’s now $4,000 and the bill would raise exempt sales of
used cars up to $7,500.
bill also exempts sales of used trailers if they cost less than $4,000. About
38,000 additional used vehicles would become exempt if the bill passes.
chambers have passed HB 1564 to modernize 911 call systems. Funding will be
from higher fees on cell phones. Fees on landline telephones have dropped
severely, because so many consumers have switched to cell phones and have
cancelled their land lines.
House must agree with a Senate amendment for passage of the bill to be final.
both chambers have passed legislation to move primary elections from May to
March in years of presidential elections. It has been sent to the governor.