New Tax Cuts Take Effect for Arkansas

BY STATE SENATOR LARRY TEAGUE –

LITTLE ROCK – A package of tax cuts took effect at the new year that over time will save Arkansas more than $161 million a year.

The major tax reductions are Act 1459 to reduce state income tax rates, Act 1488 to lower state taxes on capital gains and Act 1411 to reduce the sales tax paid by manufacturers on utility bills.

The reduction in state income tax rates became effective at the beginning of the year for taxpayers in the lower brackets, and in future years will include income taxpayers in all brackets. The act will save Arkansas taxpayers an estimated $2.5 million this year and within two years the total tax savings will be $55.7 million a year.

Act 1488 exempts from the state income tax any capital gains in excess of $10 million realized after January 1, 2014.  Next year, the act will exempt 50 percent of a person’s net capital gains.  Also, it will raise the standard deduction for individuals to $2,200.

Act 1488 will save Arkansas taxpayers $600,000 this year, and next fiscal year the total savings will be an estimated $24.5 million.

Because of how it is phased in, Act 1411 will not create tax savings this fiscal year for manufacturers, but next fiscal year they will save an estimated $27.4 million a year on energy bills.

Several other tax cuts are going into effect, including Act 1441 to create a sales tax exemption on utility bills for qualified agricultural, horticultural and aquaculture structures.  This year it will save Arkansas agriculture interests an estimated $4 million in lower taxes, and next year those savings will increase to $10.5 million a year.

Another tax relief bill that takes effect this year is a new exemption from the income tax that active duty military personnel used to have withdrawn from their service pay. For members of the armed forces on active duty, Act 1408 will generate $3.6 million in tax savings this year and $7.2 million next year.

Also taking effect this year is Act 595, which will require voters to present a government-issued photo ID in order to receive a ballot. Besides the primary elections in May and the general election in November, there will be a couple of special elections on January 14. One special election is for state senator from District 21, which includes Jonesboro and parts of Craighead County.

The sale of sky lanterns is prohibited as of January 1 because of Act 1000 of 2013. It defines a sky lantern as an unmanned free-floating device that contains an open flame. Firefighters pushed for passage of Act 1000 during the 2013 legislative session.

Act 1355 puts a cap on the number of specialty license plates that can be issued by the state Revenue Office.  The limit will be the number of different types available on January 1.  According to the Revenue Office, there are 110 different specialty plates and perhaps a dozen more organizations are completing the application process. Pictures can be seen at this Internet address: http://www.dfa.arkansas.gov/offices/motorVehicle/Pages/specialityPlates.aspx

Many bills take effect 90 days after the official adjournment of the legislative session, which in 2012 was August 16.  Some bills have emergency clauses and take effect immediately when they are signed by the governor.

Budget bills and appropriations take effect on the first day of the state fiscal year, July 1. Many tax measures and bills that affect education are phased in and their effective dates are often on January 1.

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