Natural State News

Arkansans may see more jobs and life improvements if the state legislature passes proposed tax cuts.

The tax reduction would happen over the next 10 years, the Arkansas Democrat-Gazette reported.

“To me, this strikes the right balance of making sure that we are providing tax relief (and) simplification to working families, and then also showing that we are willing to be competitive on income taxes with our neighbors,” Sen. Jonathan Dismang said, according to the Arkansas Democrat-Gazette.

Arkansas Attorney General Leslie Rutledge | Arkansas Attorney General

A consultant told state lawmakers earlier this month that the proposal would reduce the state’s top individual income tax rate from 5.9% to 5.5% and the lower and middle-income tax tables would be consolidated, the Arkansas Democrat Gazette reported.

Arkansas has consistently beaten its revenue forecasts and, including September 2021, the state has done so for 31 consecutive months, according to a release from Gov. Asa Hutchinson office. 

“The surplus trend line puts Arkansas in good position to have another gradual reduction in the income tax rates,” Hutchinson said in the release.

Arkansas' tax revenue has been growing faster than anticipated, which is the reason for the consistent budget surplus the state is seeing. Given that the state is in a very competitive tax environment with its neighboring states and has seen a consistent surplus, it seems important that the move to cut individual income tax in the state is gaining speed, Jeremy Horpedahl and Jospeh Johns wrote in an opinion piece published by the Arkansas Democrat-Gazette.

Horpedahl and Johns wrote that it is estimated that “if all of the most aggressive parts of the proposed changes are put in place, a married couple with one child, filing a joint return and earning about $50,000 (roughly the Arkansas median household income), could see their income-tax burden reduced from about $1,800 now to $1,500 in 2026. That's about $300 more in your pocket every year.”

Arkansas Attorney General Leslie Rutledge wants to eliminate Arkansas’ individual income tax by 2030, Talk Business & Politics reported.

Three democratic candidates for governor all oppose the proposed income tax reduction, especially reducing it to zero. 

One candidate, Chris Jones, said the following about the tax cuts: “When I think about a proposal that would eliminate such a large portion of the budget, what I’m seeing is fewer teachers, fewer police officers to keep our community safe, fewer hospitals in rural areas to keep our communities healthy.”