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Senate committee hears bill to create 10% Arkansas credit tied to federal EITC for working families
Summary
Senators heard testimony on SB 10, which would give Arkansas taxpayers a refundable state credit equal to 10% of their federal Earned Income Tax Credit; DFA estimated a $77 million revenue impact and that about 289,000 taxpayers would receive a benefit. Committee took no vote.
Senate Revenue & Tax Committee — Lawmakers heard from sponsors and advocates Tuesday on Senate Bill 10, which would give Arkansas taxpayers a refundable state tax credit equal to 10% of the federal Earned Income Tax Credit (EITC).
Senator Dave Wallace presented the bill, saying it would "give back 10% of their taxes" and would be phased out as incomes rise; he offered a working example that someone earning roughly $21,000 could receive about $300 in state credit. Annabeth Gorman, executive director of the Women's Foundation of Arkansas, testified the measure targets low‑income working families and said it would particularly help essential, low‑wage workers and single parents.
The bill drew immediate fiscal and administration questions. Paul Goering of the Arkansas Department of Finance and Administration (DFA) told the committee DFA prepared a fiscal impact showing an estimated $77,000,000 revenue impact and that roughly 289,000 Arkansas taxpayers would receive the credit as contemplated. Goering cited an IRS estimate that 25.3% of federal EITC payments in FY2019 were improper and flagged administrative concerns tied to fraud detection and processing. "DFA did prepare a fiscal impact statement, with regards to Senate Bill 10, of $77,000,000," he said.
Committee members asked how the credit would be administered. Goering explained the state calculation would be 10% of the amount the taxpayer claimed on the federal return and would appear as a refundable credit on the Arkansas return; DFA auditors would perform audits and the state would receive routine federal correction reports if the IRS later disallowed a federal claim.
Members also asked for comparative context on tax changes that have affected low‑income households over past years and pressed advocates for data on how the proposed credit compares with prior state and federal tax actions.
No committee vote was taken. Senator Wallace closed his presentation and the chair said the committee would call sponsors back when the bill is scheduled for a vote.
Sources: Sponsor presentation by Senator Dave Wallace; testimony by Annabeth Gorman, Executive Director, Women's Foundation of Arkansas; fiscal impact and answers from Paul Goering, Arkansas Department of Finance and Administration.
