HB1015
To Amend The Individual Income Tax Laws; And To Create An Income Tax Credit For Dependent Children.
AI-Generated Summary
This bill proposes to amend Arkansas's individual income tax laws by creating a new tax credit for dependent children. The credit is defined as three hundred dollars ($300) per qualifying child. A "qualifying child" is generally defined by federal tax law but is restricted to individuals under the age of eighteen (18) at the end of the taxable year. This credit is available to individual taxpayers with a net income up to one hundred thousand dollars ($100,000) and to taxpayers filing jointly with a net income up to two hundred thousand dollars ($200,000). If a married couple files separately, the credit amount is to be allocated equally between them. The Secretary of the Department of Finance and Administration is mandated to annually adjust the credit amount based on the cost-of-living adjustment, which is tied to the Consumer Price Index. If the calculated credit exceeds a taxpayer's income tax liability, the excess amount will be refunded to the taxpayer. This new tax credit is effective for tax years beginning on or after January 1, 2025.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries of this bill would be Arkansas taxpayers who have dependent children under the age of eighteen and meet the specified income thresholds for claiming the credit. This includes individuals with net incomes up to $100,000 and married couples filing jointly with net incomes up to $200,000. The bill also allows for a refund of any excess credit over tax liability, which would further benefit these taxpayers by providing additional financial relief. The Department of Finance and Administration would be responsible for administering this credit and its adjustments.
Who Might Suffer?
The state government, specifically the state's general fund, would be negatively impacted by this bill due to a reduction in anticipated tax revenue. The cost of providing these tax credits and potential refunds will decrease the overall tax collections. While not directly named, taxpayers who do not meet the income thresholds or do not have qualifying dependent children will not benefit from this specific tax credit, and the broader impact on state revenue could indirectly affect public services funded by tax dollars.