LEGISLATIVE FISCAL OFFICE
Fiscal Note ACT 134
Fiscal Note On: SB 159 SLS 21RS 391
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: June 15, 2021 10:23 AM Author: ALLAIN
Dept./Agy.: Revenue
Subject: Income Tax Analyst: Greg Albrecht
TAX/TAXATION EN SEE FISC NOTE GF RV See Note Page 1 of 1
Constitutional amendment to reduce the maximum rate of individual income tax and to provide for a federal income tax
deduction as provided by law. (2/3 - CA13s1(A))
Present constitution allows income taxes to be graduated according to the level of income, requires a deduction of federal
income taxes paid when computing state income taxes, and prohibits the rates and brackets from exceeding those in effect
on January 1, 2003.
Proposed constitution requires that the maximum state individual income tax rate on individuals shall be 4.75%, for tax
years beginning after December 21, 2021, and eliminates the requirement for a federal income taxes paid deduction for
income tax (applicable to both individual and corporate income tax). A deduction for federal income taxes paid may be
provided by law.
To be submitted to the electors at the statewide election to be held on October 9, 2021.
EXPENDITURES 2021-22 2022-23 2023-24 2024-25 2025-26 5 -YEAR TOTAL
State Gen. Fd. SEE BELOW $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
REVENUES 2021-22 2022-23 2023-24 2024-25 2025-26 5 -YEAR TOTAL
State Gen. Fd. SEE BELOW SEE BELOW SEE BELOW SEE BELOW SEE BELOW
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
EXPENDITURE EXPLANATION
The amendment has contingent upon its adoption modifications to the individual and corporate income taxes for tax year
2022, and the corporate franchise tax for tax year 2023. While not effective until and if adopted at a statewide election in
October 2021, the Department of Revenue may have to incur costs or system modification and testing in an expedited
fashion this summer and fall (the first half of FY22) to be prepared for adoption. These costs are typically several thousands
of dollars of staff time. The enrolled general appropriations bill for FY22 provides $2 million of funding for a statewide
election this fall.
REVENUE EXPLANATION
The deduction for federal taxes paid and the rate and bracket structure of the individual and corporate income taxes are
currently provided in statute. This constitutional amendment does not change those statutory provisions, and does not
prohibit a federal tax deduction for income tax. This amendment does mandate a maximum 4.75% rate for individual income
tax effective for tax years beginning after December 31, 2021 (the 2022 tax year). This is one and a quarter percentage
points lower than the current law top marginal tax rate of 6% for individual income tax. Taken in isolation, the bill reduces
total tax liabilities by over $278 million.
However, this amendment has other statutory changes contingent upon its adoption. These other bills (HB 278, HB 292, and
SB 161), affecting both individual and corporate income tax and the corporate franchise tax, modify the existing individual
and corporate graduated rate and bracket structures and deductions for federal taxes paid, and excess itemized deductions,
as well as the rate and bracket structure of the corporate franchise tax. The specific estimated fiscal effects of those bills are
discussed in the fiscal notes associated with each bill. The individual income tax provisions (HB 278) are essentially revenue
neutral from an aggregate state fiscal perspective. The combined corporate tax impact (HB 292, corporate income tax) and
(SB 161, franchise tax) is also closely revenue neutral in FY22 -$2.2M and FY23 +$1.1M, and then becomes a net revenue
decrease in each subsequent year; FY24 -$21.1M, FY25 -$26.7M, FY26 and beyond -$26.7M. Over the five-year fiscal note
horizon, the two bills result in a $75.6M revenue decrease.
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
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