LITTLE ROCK, Ark. – A proposed cut in state income taxes made it through both chambers of the Arkansas General Assembly during the special session Wednesday.
House Bill 1001 and Senate Bill 1 both passed their respective chambers during morning sessions before being sent across the capitol. The mirroring bills both passed with wide support.
Under the plan, the state’s top income tax rate would eventually fall to 4.9% if certain criteria are met and the tax tables would be simplified. These changes could pull nearly $498 million from annual state revenue projections by Fiscal Year 2026.
Proponents of the bill say that every level of the taxpayer in Arkansas will see some tax cut.
State Senator Johnathan Dismang said, “With a significant focus on working families I believe this bill strikes the correct balance of helping our working Arkansans and our job creators.”
But not every legislator believes tax cuts will make the most impact. Some lawmakers brought up things like Pre-K, healthcare investment, and more funding for disability services in Arkansas.
“Of course we can afford a big tax break if we’re not taking care of so many other things we need to take care of in our state,” State Senator Joyce Elliott said during debate.
The Corporate Tax rate will also be cut as a part of the plan. If those same criteria are met for personal income taxes then the Corporate Tax rate will be 5.3%.
During debate on the House floor, some said lowering the Corporate Tax is just another tax cut for the wealthy. Those in favor believe giving a smaller tax break to job creators will make Arkansas more attractive to businesses.
“We are in a constant competition with other states and, yes, other countries for jobs, for new movers, for new capital, for investment,” State Representative David Ray said.
House Democrats still believe this is more of a wealthy tax cut because middle and low-income earners are not seeing meaningful results from these cuts.
“Most Arkansans will only see a decrease of $40-60 or the equivalent of a family dinner at a fast food restaurant,” State Representative Denise Garner argued.
In addition to the tax bills, each chamber also passed bills amending recycling tax credits, clarifying LLC laws, addressing appointments to the state tax appeals commission and moving funds for a proposed US Steel project in Eastern Arkansas. They also repealed an earlier bill addressing insulin prices.
There was an attempt by Representative Mary Bentley to introduce HB1010, a new abortion bill modeled after the controversial measure passed in the state of Texas. The House Speaker blocked the move, though, noting it was improperly introduced.
The Senate reconvenes at 9:00 am and the House will reconvene at 10:00 am Thursday morning.