LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 293 HLS 21RS 495
Bill Text Version: REENGROSSED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: April 28, 2021 5:13 PM Author: RISER
Dept./Agy.: Revenue
Subject: Corporate Income Tax Analyst: Greg Albrecht
TAX/CORP INCOME RE -$56,000,000 GF RV See Note Page 1 of 1
Provides for the rate of corporation income tax
Proposed law imposes a flat corporate income tax rate of 6.5%. Applicable to all tax years beginning on and after January 1,
2023.
Contingent upon adoption of the constitutional amendment contained in House Bill 275 of this session.
This fiscal note assumes both a constitutional amendment and a statutory companion are enacted, removing the federal
income tax deduction, and then a flat tax rate of 6.5% is applied to the expended corporate income tax base.
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. $0 ($10,000,000) ($50,400,000) ($56,000,000) ($56,000,000) ($172,400,000)
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 $0 ($10,000,000) ($50,400,000) ($56,000,000) ($56,000,000) ($172,400,000)
EXPENDITURE EXPLANATION
Tax system changes will have to be made to incorporate the elimination of the deduction from the tax processing system.
These changes are typically estimated as several thousands of dollars of staff time for design, modification, and testing.
REVENUE EXPLANATION
The Dept. of Revenue estimated the effect of this bill (single 6.5% tax rate), under the assumption that the deduction for
federal income taxes paid is also eliminated in HB 292 and HB 275 - increasing the tax base). The result was an aggregate
liability reduction of $56 million. Corporate filing patterns are such that 18% of this liability change is estimated to occur in
the immediate fiscal year (FY23 estimated payments), followed by an additional 72% in the second fiscal year (FY24 returns
& extensions), and a final additional 10% in the third fiscal year (FY25 returns & extensions). This pattern accumulates each
tax year’s liability change into fiscal year receipt changes as follows: $10 million loss in FY23, $50.4 million loss in FY24, and
$56 million loss in FY25 and each year thereafter. These are the estimates reported in the revenue table above.
The Dept. of Revenue also estimated the effect of this bill (single 6.5% tax rate), in isolation, by recalculating 2018 tax year
corporate returns (the latest year with complete filings). The result was an aggregate liability reduction of $129 million.
Using the same filing pattern as discussed above, each tax year’s liability change accumulate into fiscal year receipt changes
as follows: $23.2 million loss in FY23, $116.1 million loss in FY24, and $129 million loss in FY25 and each year thereafter.
Actual annual revenue losses can differ materially from these estimates due to the inherent volatility of the corporate tax
base, and the ability of corporate tax filers to engage in tax planning. Thus, there is considerable uncertainty as to the level
of annual tax liability and tax receipt changes resulting from the bill.
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} Legislative Fiscal Officer
or a Net Fee Decrease {S}


Statutes affected:
HB293 Original:
HB293 Engrossed:
HB293 Reengrossed: