LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 299 HLS 21RS 885
Bill Text Version: ORIGINAL
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.: REVISED
Date: April 25, 2021 12:40 PM Author: JAMES
Dept./Agy.: Revenue
Subject: Earned Income Tax Credit Analyst: Greg Albrecht
TAX CREDITS OR -$68,500,000 GF RV See Note Page 1 of 1
Increases the amount of the earned income tax credit and makes the increased amount permanent
Current law provides a refundable tax credit for taxpayers eligible for the federal earned income tax credit. The state credit
is 5% of the federal credit amount, through December 31, 2025. After that date the state credit is 3.5% of the federal
credit.
Proposed law increases the credit to 10% of the federal credit amount, and makes this level credit permanent.
Effective upon governor's signature.
EXPENDITURES 2021-22 2022-23 2023-24 2024-25 2025-26 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $0 $0 $0 $0 $0
REVENUES 2021-22 2022-23 2023-24 2024-25 2025-26 5 -YEAR TOTAL
State Gen. Fd. ($65,100,000) ($68,500,000) ($68,500,000) ($68,500,000) ($68,500,000) ($339,100,000)
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total ($65,100,000) ($68,500,000) ($68,500,000) ($68,500,000) ($68,500,000) ($339,100,000)
EXPENDITURE EXPLANATION
There is no anticipated direct material effect on governmental expenditures as a result of this measure. The current
worksheet used to calculate the state earned income tax credit would be modified, at minor cost, to include the new
calculation at 10% rather than 5%.
REVENUE EXPLANATION
Based on 2019 tax return data, the state earned income tax credit is currently worth approximately $68.5 million per tax
year at the 5% calculation. A 10% calculation would effectively double the credit to $137 million per year , resulting in an
additional $68.5 million of credit cost to the state fisc. Filing patterns for returns claiming this credit indicate that 95% of the
credit tends to be realized in the first fiscal year possible (FY22 in this case). By the second fiscal year, the full tax year
credit amount is being realized.
Outside the fiscal note horizon the additional credit cost is $90 million per year, based on the current law baseline that
reduces the credit to 3.5% after tax year 2025.
Senate Dual Referral Rules House
13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
Christopher A. Keaton
x 13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} or a Net Fee Decrease {S} Legislative Fiscal Officer


Statutes affected:
HB299 Original: