HB1026
To Create The Arkansas Promise Act; And To Create An Income Tax Credit For Tuition Paid For An Eligible Student At A Public Institution Of Higher Education.
AI-Generated Summary
House Bill 1026 proposes the creation of the Arkansas Promise Act, which establishes an income tax credit for taxpayers paying tuition at a public institution of higher education in Arkansas. The credit is applicable to tuition costs paid for the taxpayer or their dependent, excluding amounts covered by scholarships or grants. To qualify, the student must be an in-state resident, pursuing a certificate, associate, or bachelor's degree, and must have initially enrolled within two years of high school graduation. Specific academic requirements include maintaining at least 6 credit hours per semester and a minimum 2.5 GPA. Furthermore, the student must have completed the FAFSA, and the tax credit is only available for households with an adjusted gross income up to $90,000. The credit can be claimed for a maximum of four consecutive academic semesters, and any excess credit over the taxpayer's income tax liability will be refunded. This provision would take effect for tax years beginning on or after January 1, 2025.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries of this bill are Arkansas taxpayers who pay tuition for eligible resident students attending public two-year or four-year institutions of higher education, particularly those within the specified adjusted gross income bracket (up to $90,000). Additionally, eligible public higher education institutions in Arkansas would likely benefit from increased enrollment or retention among qualifying students due to the reduction in net tuition costs realized by their students' families. Students meeting the academic and enrollment criteria would also benefit from lower out-of-pocket educational expenses.
Who Might Suffer?
The primary entities negatively impacted by this legislation are the State of Arkansas's general revenue funds, as the implementation of a refundable income tax credit will result in reduced tax collections or direct expenditures from the state treasury. Taxpayers whose income exceeds the $90,000 threshold or who do not have dependents enrolled in qualifying programs will not benefit from this specific tax credit. Furthermore, private institutions of higher education are excluded from the scope of this tuition credit, potentially affecting their competitive standing against public institutions.