Multi-million dollar tax cuts take effect in 2024
LITTLE ROCK – Numerous state laws will take effect in 2024, including tax reductions that will save Arkansas families and businesses about $250 million a year.
During a September special session the legislature approved tax cuts that will benefit Arkansans in two ways. An income tax reduction will lower the top rate from 4.7 to 4.4 percent for individuals. Also, the top rate for corporate taxes will go down from 5.1 to 4.8 percent.
The tax relief measure includes a one-time credit of $150 for all taxpayers whose incomes was below $89,600 in 2023. That means Arkansas taxpayers will benefit from the credit in the next couple of months, when they file their income taxes for 2023.
For taxpayers with incomes between $89,601 and $103,600 the amount of the credit gradually decreases. People whose income is $103,601 and above will not get a credit.
In all, about 1.1 million people in Arkansas will save $150 million a year because of the tax reductions enacted by the legislation earlier this year. Also, about 7,500 businesses will save $34.5 million a year.
The $150 credits will save individuals $156.3 million on their 2023 taxes. However, they will not be in effect in future years.
Those cuts were not the only tax relief enacted by the legislature in 2023. During the regular session at the beginning of the year, legislators approved Senate Bill 549 to lower income taxes for individuals, trusts, estates and corporations.
Those tax cuts benefited 1.1 million individual taxpayers whose incomes are above $24,300 a year. The Senate bill became Act 532 of 2023.
Businesses will also benefit from Act 485 of 2023. It phases out the “throwback rule,” a provision in state tax law that formulates taxes on multi-state corporations with a connection, or nexus, in Arkansas when they do business in other states.
For those businesses, fewer sales of property in other states will be taxed.
Act 532 takes effect for tax year 2024 and will save businesses $10.6 million. The savings steadily increase until Fiscal Year 2030 and afterwards, when businesses in Arkansas will see tax savings of $74 million a year because of Act 532.
New Bail Bond Law
Act 659 of 2023 changes the length of prison sentences for violent offenders, and requires inmates to participate in drug rehabilitation and education programs in order to qualify for parole.
The act will affect county jails, sheriffs, bail bondsmen and people who get arrested and want to bail out of jail. As of January 1, 2024, the 10 percent premium for bond must be paid in full before the defendant may be released from jail. Previously, defendants could make arrangements to pay their bail bondsman in installments.
Another provision in Act 659 affects defendants who put up property to make bail. Starting in 2024, bail bondsmen must submit paperwork verifying the amount of the property is sufficient, and verifying that it has been transferred to the surety. It will not be enough for the bail bondsman to simply collect a deed or title.
Some judges already have begun working on documents to streamline the process for defendants who choose to put up property.