Department of Finance and Administration
Legislative Impact Statement
Bill: HB1152
Bill Subtitle: TO CREATE AN INCOME TAX EXEMPTION FOR TEACHERS.
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Basic Change :
Sponsor: Rep. Vaught
HB1152 exempts from state income tax the first $50,000 of wages received by an individual for their
work as a teacher. To qualify for the exemption, a teacher must:
 Be employed by a public school or an open-enrollment charter school in a teaching,
instructional, or educational capacity; and
 Be engaged in student instruction in kindergarten through grade 12 for more than 70% of their
contracted or employed time.
HB1152 is effective for tax years beginning on or after January 1, 2023.
Revenue Impact :
FY2023 - $38.7M General Revenue Reduction
FY2024 - $77.5M General Revenue Reduction
[ The average salaries and number of potentially qualified teachers was obtained from the Arkansas
Public School Computer Network (APSCN) Annual Statistical report for the 2020/2021 year. Based on
this data, the State of Arkansas has 32,335 public school teachers and 1,242 charter school teachers
for a total of 33,577 potentially eligible teachers for the exemption. The estimated number of eligible
individuals was multiplied by the maximum allowed exemption of $50,000 since the average salary for
teachers was above at $52,552, and then multiplied by the effective tax rate for 2020 of 4.6135% to
determine the overall estimated fiscal impact. ]
Taxpayer Impact :
A taxpayer employed as public school teacher or an open-enrollment charter school teacher would be
allowed an exemption from income tax for the first $50,000 of wages received for employment as a
teacher.
Resources Required :
Computer programs, tax forms, and instructions will need to be updated. Programming costs for the
Arkansas Integrated Revenue System (AIRS) is estimated at $8,000.
Time Required :
Adequate time is provided for implementation.
Procedural Changes :
Department employees will need to be educated as to the exemption as well as the tax community.
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 Department of Finance and Administration
Legislative Impact Statement
Bill: HB1152
Bill Subtitle: TO CREATE AN INCOME TAX EXEMPTION FOR TEACHERS.
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Other Comments :
None.
Legal Analysis :
None.
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