Arkansas residents will see state income tax breaks in 2023 according to officials
(The Center Square) by Kim Jarrett
Arkansas' state income tax is the lowest ever recorded and tax payers will see an immediate benefit when they file in 2023.
The Legislature first agreed to rolling back the income tax from 5.5% to 4.9% in December 2021.
Lawmakers held a special session in August to make the cuts retroactive to the 2022 tax year after the state ended fiscal year 2022 with a $1.6 billion surplus. The state first enacted an income tax in 1929 at a rate of 5%.
Also included in the bill is a provision that cuts the corporate tax rate from 5.9% to 5.3% beginning with the 2023 tax year.
One lawmaker is proposing another income tax change in the upcoming legislative session.
Rep. David Ray, R-Maumelle, is proposing an increase in the standard deduction from $2,220 to $4,400. The increase would take effect for the 2023 tax year, according to the bill.
The newly-formed Opportunity Arkansas wants to eliminate the state income tax altogether.
Nicholas Horton, founder and CEO of the organization, said the state could make up the revenue by trimming government.
"The state income tax brings in less than 10% of that amount," Horton told The Center Square. "In the context of state government, it's not that much money so I think it's very doable and there's a lot of naysayers and a lot of fearmongering around this issue...but there's a lot of money, a lot of waste in state government."
Lawmakers return to Little Rock on Jan. 9 for the 2023 session. The following day, Sarah Huckabee Sanders will be sworn in as the new governor. Current governor Asa Hutchinson was term limited and could not run again.
The Senate will also have a new president as the two veteran politicians are switching roles in January. Attorney General Leslie Rutledge was elected lieutenant governor in November.
Current Lt. Gov. Tim Griffin was elected to Rutledge's job as attorney general.