The proposed bill aims to amend Arkansas's income tax laws by reducing tax rates for individuals, trusts, estates, and corporations, while also introducing an inflationary relief income tax credit for certain taxpayers. Starting from tax years beginning on or after January 1, 2024, the bill establishes new income tax brackets for individuals and trusts, with rates ranging from 0% to 4.4% based on net income levels. Additionally, it introduces a bracket adjustment for those with net incomes slightly above $87,000, allowing for a reduction in tax liability based on specific income thresholds. The bill also modifies the corporate tax structure, implementing a tiered tax rate for both domestic and foreign corporations, with rates starting at 1% for the first $3,000 of net income and increasing to 4.8% for income exceeding $11,000.

Furthermore, the bill includes provisions for an inflationary relief income tax credit for resident individual taxpayers, which is structured based on their net income and filing status. For the tax year beginning January 1, 2023, individual taxpayers with net incomes up to $103,600 can receive credits ranging from $10 to $150, while joint filers with incomes up to $207,200 can receive credits from $20 to $300. The bill emphasizes that these credits are only applicable for the specified tax year and cannot be claimed by nonresidents or part-year residents. An emergency clause is included, indicating the immediate necessity of the bill to ensure financial stability and allow for timely implementation of the changes.

Statutes affected:
HB 1001: 26-51-201(a), 26-51-205(a), 26-51-205(b)