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Committee hears working-taxpayer credit (linked to EITC); DFA estimates $23.2M FY2022 impact, no vote taken
Summary
Senate Bill 10, as amended to set a state credit equal to 3% of the federal Earned Income Tax Credit (EITC), drew testimony from advocates and DFA; DFA provided a revised fiscal impact of a $23,200,000 reduction in general revenue for FY2022; the committee declined to vote and the bill remains pending.
Senate Bill 10 would create a state working-taxpayer credit tied to the federal Earned Income Tax Credit (EITC). Sponsor State Senator Dave Wallace described the amendment that lowered the proposed state credit from 10% to 3% of the federal EITC and framed the measure as relief for working Arkansans, including teachers, first responders and child-care workers.
Advocates provided testimony in support. Abby Hughes Holsclaw, senior director at the Arkansas Asset Funders Network, told the committee the bill would help broad swaths of working families: "46% of the population in our state falls into this category," she said, and she estimated roughly 300,000 Arkansas children live in households that would benefit. She offered personal examples to show how the credit would affect everyday household budgets.
Anna Beth Gorman, executive director of the Women’s Foundation of Arkansas, said the credit would disproportionately support women and families and help provide economic security for workers at low wage levels.
Paul Gehring of DFA presented a revised fiscal-impact statement after the amendment that reduced the credit to 3 percent: DFA reported a $23,200,000 reduction in general revenue for fiscal year 2022 attributable to the change. Gehring also noted the American Rescue Plan broadened the federal EITC and that any federal expansion would increase Arkansas’ cost under a percentage-linked formula unless the legislature later amended state law.
Committee members asked whether tying the state credit to a percentage of the federal EITC would automatically pass through future federal expansions to state cost; Gehring confirmed that dynamic and said the legislature could amend state law later. Members also probed refundability and eligibility ranges; witnesses cited federal EITC income brackets and typical credit amounts but emphasized that the state structure in SB10 would make local benefits immediate.
Senator Wallace closed, but the chair announced the committee would not take a vote on SB10 at this meeting, leaving the bill pending further consideration and potential amendment.
