A proposal to cut the state's top individual and corporate income tax rates easily passed in the House on Thursday and was signed into law by Gov. Sarah Huckabee Sanders.
Senate Bill 8, sponsored by Sen. Jonathan Dismang, R-Searcy, will reduce the top individual rate from 4.7% to 4.4% and the top corporate rate from 5.1% to 4.8%.
The law takes effect Jan. 1. About 1.1 million individual income taxpayers will receive a tax reduction.
"If you're a business owner looking to relocate or a young family looking for a place to settle down, moving to Arkansas has never been better," Sanders said in a news conference where she signed the legislation.
The cuts will cost the state $248.5 million in revenue this fiscal year and $184.5 million in revenue in fiscal 2025, according to a legislative impact statement filed by the Department of Finance and Administration.
It marks the second round of tax cuts under Sanders since she took office in January. Earlier this year, the Republican governor signed into law a $124 million tax cut that reduced the individual rate from 4.9% to 4.7% and the corporate rate from 5.3% to 5.1%.
The latest measure also creates a one-time $150 tax credit for residents who earn up to $89,600 this year.
Sanders also signed a bill that brings her closer, she said, to achieving her campaign pledge of "responsibly" phasing out the state income tax entirely. Senate Bill 1, sponsored by Sen. Jimmy Hickey, R-Texarkana, creates a $710 million reserve fund using money from the state's $1.2 billion surplus from fiscal 2023.
Those proposals moved quickly through the Legislature during this week's special session, unlike a proposal to weaken the state's Freedom of Information Act that drew bipartisan backlash. Sanders and Republicans backed off a broader plan to block public access to government records and narrowed the legislation to focus on shielding the governor's travel and security records.
Sanders signed the measure into law Thursday, saying the portion of the bill that survived was the most important part.
"I think you always go as big as you can and look for those changes that you know will make governing more effective, more efficient," she said. "Our job is to work with our partners in the Legislature. We don't get to dictate the rules of the game all by ourself from the executive branch."
