Arkansas Governor Asa Hutchinson claps after signing tax bills during a signing ceremony at the State Capitol in Little Rock on Tuesday, April 9, 2019. (Arkansas Democrat-Gazette / Thomas Metthe)
The state’s highest corporate tax rate has dropped from 6.5% to 6.2% today.
The cut is part of a plan to introduce a cut in the highest corporate tax rate over two years.
According to Law 822 of 2019, the rate should fall back to 5.9% from January 1, 2022.
Today’s rate cut applies to income over $ 100,000. With the 2022 interest rate cut, the minimum income will drop to $ 25,000.
State Department of Finance and Administration officials originally forecast the interest rate cut to increase general revenues by $ 9.8 million in the current fiscal year 2021, which ends June 30, and by $ 19.7 million in fiscal year 2022 and fiscal year 2023 would reduce by $ 9.9 million and more.
Governor Asa Hutchinson said his priority has always been to lower the individual income tax rate as it benefits most people.
“But I’m always happy when we can lower other tax rates,” he said.
Act 822 of 2019 was sponsored by Senator Bart Hester, R-Cave Springs.
When Hutchinson signed Law 822 in April 2019, the governor said, “I applaud our lawmakers because they wanted to make this a priority. Mine has focused on individual tax cuts, but they want to make sure we’re competitive.” our corporate tax rate. “
At that time, the governor said that the lengthy and substantive work of the Legislative Task Force on Tax Reform and Tax Relief in recent years “created the conditions for this”  And as soon as this phase was established, we lowered the income tax rate, we carried out a comprehensive corporate tax reform and a reform of the property tax relief. “
The highest corporate tax rate of 6.2% will be the 27th highest in the nation, said Katherine Loughead, senior policy analyst at the Washington, DC-based Tax Foundation.
A total of 2,900 corporate taxpayers filed corporate tax returns in 2019 and reported taxable income of more than $ 100,000, said Scott Hardin, a finance spokesman.
The average tax cut from lowering the highest corporate rate to 6.2% is $ 7,362, Hardin said. The total corporate tax cut based on the filings in 2019 is $ 21.3 million for a full year, he said.
The average tax cut for 1,744 businesses making between $ 100,000 and $ 500,000 is $ 375, while the average tax cut for 408 businesses making between $ 500,001 and $ 1 million is $ 1,800, he said.
The average tax cut for the 748 companies making more than $ 1 million is $ 26,687, Hardin said.
Law 822 of 2019 also required foreign retailers, among other things, to levy sales and use taxes that began on July 1, 2019, and extended the loss carryforward period from five to eight years for losses in the tax year from January 1, 2020 and up to 10 years for losses in tax years beginning January 1, 2021.
Lowering the corporate tax rate