HB1066
To Increase The Standard Deduction.
AI-Generated Summary
This bill proposes to amend Arkansas Code ยง 26-51-430(b) concerning the state's income tax standard deduction. The primary purpose is to increase the standard deduction for individual taxpayers. For tax years beginning on and after January 1, 2026, the standard deduction would increase from the current $2,200 to $4,400 per taxpayer. This increase would also apply to married couples, with each spouse being entitled to claim the $4,400 standard deduction. The bill specifically outlines the current deduction amounts for tax years 2014 and 2015 as a baseline for comparison. The intent is to provide a greater deduction before income is taxed. This aims to reduce the overall tax burden for individuals and married couples filing their state income taxes.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries of this bill are individual taxpayers and married couples in Arkansas who itemize their deductions. By increasing the standard deduction, these individuals will have a larger portion of their income shielded from state income tax. This could lead to a lower overall income tax liability for a significant number of Arkansas residents, potentially increasing their disposable income.
Who Might Suffer?
If this bill becomes law, the state of Arkansas's general fund could be negatively impacted due to a reduction in overall income tax revenue. This decrease in tax revenue might necessitate budget adjustments for state services or lead to a need for alternative revenue streams to compensate for the shortfall. The extent of this impact would depend on the number of taxpayers who benefit from the increased deduction and the overall revenue generated by the state's income tax.