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Northwest Arkansas lawmakers, residents react as state approves largest tax cut in state history

Arkansas signed its largest tax cut bill in state history on Thursday. The phased plan will lower the highest income tax rate to 4.9% by 2026.
Published: Dec. 10, 2021 at 4:40 PM CST
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HARRISON, Ark. (KY3) - Arkansas lawmakers approved the largest tax cuts to personal income in state history on Thursday.

Gov. Asa Hutchinson signed bills HB1001 and SB1, Thursday afternoon to close the legislature’s special session.

The phased tax reduction plan will happen over the span of several years. During that time, the highest individual tax rate will drop from 5.9% to 4.9% by 2026. The drop marks the largest tax cut ever in the state of Arkansas.

The income tax cuts are projected by the state Department of Finance and Administration to reduce state general revenue by $135.25 million in fiscal 2022. That amount would gradually increase to $497.9 million in fiscal 2026.

“We’re growing as a state, we’re creating jobs and that is producing a climate where we can be more competitive in our tax cut,” said Gov. Hutchinson after Thursday’s special session.

The tax reduction will also exempt 100,000 low income citizens from any state income tax.

”Anybody that’s working, they are going to benefit from this,” said Rep. Nelda Speaks (R - 100th District). “It has been a desire that we could return some of the carryover money that we’ve been getting in.“

”Fantastic, it’s about time,” said Mary Ann Busman, a Boone County resident. “People we’ll really be able to appreciate that extra money that they’ve worked for.”

The tax cut will also lower corporate income tax, which currently sits at 6.2%. That will be lowered under the new law to 5.7% by 2023.

”This will help and hopefully bring more business into Arkansas,” said Rep. Speaks. “This is my last term, and I find this to be a strong note to go out on, knowing we’re putting dollars back in Arkansans pockets.”

”I think we have a track record over the last number of years of being able to cut taxes and still being able to deliver the services the people of Arkansas have come to expect,” said Speaker of the House, Matthew Shepherd.

Hutchinson says on average, an individual who makes $40,000 a year will see around $225 in return. Hutchinson says this time of the year emphasizes how happy families can be to have that extra spare cash.

”I think the politicians are starting to wise up and listen to the people who voted for them,” said Busman. “More money in your pocket means more money going into the economy and I think that’s going to be a win-win for everyone.”

The first phase of the tax reduction plan will take effect halfway through the 2022 fiscal year.

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