LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 454 HLS 21RS 397
Bill Text Version: ORIGINAL
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: April 26, 2021 6:44 PM Author: DEVILLIER
Dept./Agy.: Revenue
Subject: Reduces Various Tax Deductions and Credits Analyst: Greg Albrecht
TAX/INCOME TAX OR +$850,000,000 GF RV See Note Page 1 of 1
Reduces the amount of certain income tax exclusions, exemptions, deductions, and credits
Proposed law reduces by 50% various tax deductions, exclusions, exemptions, and credits. Major revenue impacts result
from the reduction to various corporate tax deductions from income and exclusions to income. Additional material revenue
impacts result from reducing credits for ad valorem taxes paid to local governments. Numerous expired credits are repealed.
Applicable to tax periods beginning on or after January 1, 2023.
EXPENDITURES 2021-22 2022-23 2023-24 2024-25 2025-26 5 -YEAR TOTAL
State Gen. Fd. INCREASE INCREASE INCREASE INCREASE INCREASE
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
REVENUES 2021-22 2022-23 2023-24 2024-25 2025-26 5 -YEAR TOTAL
State Gen. Fd. $0 $190,000,000 $718,000,000 $846,000,000 $850,000,000 $2,604,000,000
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 $190,000,000 $718,000,000 $846,000,000 $850,000,000 $2,604,000,000
EXPENDITURE EXPLANATION
Typically the Dept. of Revenue would indicate that the costs to modify and test tax systems to incorporate the additional
adjustment to income provided by a bill would be approximately $26,000 of staff time. However, this bill changes numerous
credits, and more significantly, changes to tax table liability calculations that will likely incur substantially more
administrative costs to incorporate, as well as likely considerable staff time dealing with taxpayer inquiries.
REVENUE EXPLANATION
To assess the bill’s potential revenue implications, the Dept. of Revenue re-calcuated 2018 electronically filed corporate
income tax returns (73%) before credits with the bill’s deduction and exclusion provisions, and scaled the results up to all
returns. This generated an 82.5% increase in tax table liability, or $1.058 billion. Filing patterns translate the tax year
liability change into fiscal year receipts changes of $190 million FY23 (18%), $952 million FY24 (90%), and $1.058 billion
FY25 and subsequent years (100%). Affected credits prior to the bill’s provisions were applied, and then the reduced amount
of credits was added back. The net effect on a fiscal year basis is reflected in the revenue table above. FY23 is first affected
through likely changes in estimated payments due in the January - June 2023 period for the tax year 2023 changes.
Of the revenue increase estimated above, most is generated by the cut to deductions from income and exclusions from
income, with the balance attributable to the reduction of credits, and these are largely associated with the credits for ad
valorem taxes paid to local governments. Many of the credits referenced in the bill have little or no utilization, and the Dept.
did not incorporate any effect from a number of economic development credit programs since there is typically a time lag
from when credits are earned and when they are claimed. Thus, over time, the net revenue gains of the bill could exceed
those estimated above.
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:
HB454 Original: 51:1787(A)(1), 51:1807(A), 51:1924(B)(1), 51:2354(C), 51:3(A)(2), 51:3085(B)(1)