Summary of Tax Cuts
Act 78 of 2017 reduced the income tax rates for lower income Arkansas taxpayers, those with incomes of less than $21,000, beginning in January of 2019. The plan provides a tax reduction to 1.3M taxpayers, with approximately 120,000 taxpayers in the lowest bracket being taken off the tax rolls.
In addition, the act created the “Arkansas Tax Reform and Relief Legislative Task Force” to examine and identify areas of potential reform within the tax laws of Arkansas. A final report will be submitted form the task force in 2018.
|Tax Reform and Relief Act||-25.25M||-50.5M|
Number of Arkansans benefiting: 1,346,415
Military retirement and survivor benefits would become exempt from taxation beginning with the 2018 tax year. Eligibility would be for those who retired from uniformed service with the Army, Marine Corps, Navy, Air Force and the Coast Guard. Also entitled for the income tax exemption would be retirement benefits for retirees of reserve components of the various armed services, the National Guard of any state, the reserve corps of the United States Public Health Service, and the National Oceanic and Atmospheric Administration Commissioned Officer Corps. A taxpayer claiming an exemption under § 26-51-307(e) on military retirement or survivor benefits would be unable to claim the $6,000 exemption under § 26-51-307(a) on retirement benefits received from non-military sources.
The Military Retirement Exemption is estimated at $13.4M in FY19
Act 141 also did some other things including reducing the soft drink tax and expanding the sales tax base and was net neutral.