Arkansas legislature plans to be back at the Capitol on Monday after a lengthy hiatus due to winter weather across the state. On the agenda are two tax breaks, which will be presented on February 9th by the House Revenue and Taxation Committee.
SB236 would exempt unemployment benefits paid in 2020 and 2021 from state income tax. Over the past few years, an average of 45,000 Arcansans have been unemployed. Last year, more than 280,000 Arcansan received unemployment benefits due to the pandemic. That’s roughly 18% of Arkansas taxpayers and $ 2.6 billion in payments. Taxes are not withheld from unemployment benefits. SB236 would ensure these Arcansan would not have to pay government taxes on the benefits they receive this year and 2020. The Department of Finance and Administration estimates the bill will have an impact of $ 51 million on revenue for the current fiscal year. SB236 passed the Senate unanimously. Another tax break bill before the House of Representatives next week is HB1361.
HB1361 would exempt small business COVID-19 aid loans like the Paycheck Protection Program (PPP) from state income tax. Last year, more than 42,000 PPP loans totaling $ 3.3 billion were made to small businesses in Arkansas. These loans are currently exempt from federal income tax.
The Arkansas unemployment rate is now 4.2%. Recent reports show that the state’s general revenues are $ 298.7 million, or 8.4%, more than at that time last year.
The available net sales are 12.3% above forecast. The results include collection increases that are tied to the shift in the income tax due date from July in the previous fiscal year to July. These reports aid in decision-making when considering tax cut proposals.
As a reminder, agendas and links to live streams for all House Committee and Floor proceedings can be found at www.arkansashouse.org.
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