Arkansas legislators passed measures this week to lower income taxes further and increase the homestead tax credit.
Identical bills, Senate Bill 1 and House Bill 1001, were passed out of committee as the legislature met for its second special session of the year. The bills would cut the top corporate income tax rate in Arkansas from 4.8 percent to 4.3 percent and the top individual income tax rate from 4.4 percent to 3.9 percent, retroactive to Jan. 1.
Two more bills that would raise the homestead property tax credit were also unanimously passed through a committee. Senate Bill 3 and House Bill 1002 would bump the credit to $500 from $425. The credit was raised from $375 in the 2023 legislative session when lawmakers slashed more than $100 million from state taxes.
The state Department of Finance and Administration reported the tax breaks would reduce the state’s general revenue by a cumulative $483.5 million in fiscal year 2025 and by $322.2 million each fiscal year afterward. No one spoke against the measures, but lawmakers supporting them cited the state’s longstanding revenue surplus of hundreds of millions of dollars.
SB1 and HB1001 have emergency clauses and thus would go into effect immediately after being signed by Gov. Sarah Huckabee Sanders.
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