Department presents tax-credit report; refundable and confidential credits highlighted

Eddie, presenting a tax-credits report to the committee, walked members through the report’s color coding, availability and confidentiality rules and flagged several large credits and administrative issues. He told the committee the report uses color codes to indicate refundable credits, credits available only to C corporations, and credits that were not in effect during the tabulated years. He explained that “if the value of the credit to the taxpayer exceeds that amount of the taxpayer's tax liability… the state actually pays the balance of that amount to the taxpayer.”

Eddie described why tax-credit data lag can be substantial: taxpayers often file amended returns and many complex credits involve pass-through reconciliation, so the Department is still finalizing tax year 2022 data. He explained confidentiality rules for small numbers of filers—individual credits with fewer than five filers are flagged confidential and grouped for reporting but the Department can report the aggregate of confidential credits if the sum is based on five or more filers.

Eddie highlighted several specific credits and totals. For the state’s earned income tax credit (EITC), which largely piggybacks the federal credit, he noted a sharp increase in 2021 tied to temporary federal COVID-era expansions and provided the report’s 2021 figures: about $83,400,000 of credit allowed; of that, $33,500,000 offset tax liability and $49,900,000 was refunded to taxpayers. He also called attention to the High Performance Incentive Program (HPIP) and said the report listed roughly $58,900,000 in credit for 2021; Eddie cautioned that because many HPIP awards flow through pass-through entities, the number of individual taxpayers ultimately affected is larger than the count of qualified entities.

Eddie emphasized that one large omission from the tabulation explains much of the difference between the report’s lines and the broader tax-expenditure totals: the credit for taxes paid to other states. He said that credit applies to about 125,000 filers and “amounts to approximately $500,000,000 in a given year,” and that it serves primarily to prevent double taxation for residents who earn income in other states.

Committee members asked about credits listed as confidential and about supply of additional information. A senator requested a complementary report showing tax credits issued but not yet claimed (exposure) and transferability and sunset information for credits; Eddie agreed some of that detail can be provided but said not all data are universally available without additional work. The committee did not act on legislation but requested further departmental follow-up and updated datasets.