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Senate committee passes tax package with new EITC trust fund and higher tobacco/e-cigarette taxes
Summary
After hours of debate and public testimony from vape-industry representatives and health professionals, the Senate Revenue & Tax Committee passed Senate Bill 571 as amended, creating an EITC trust fund funded in part by a 20% excise on cigarettes and taxation of e-cigarettes to help finance income-tax reductions for low- and middle-income Arkansans.
The Senate Revenue & Tax Committee on Dec. 6 approved Senate Bill 571 as amended, a broad tax package that pairs targeted income-tax reductions and an Earned Income Tax Credit (EITC) with higher cigarette and e-cigarette taxes.
Senator Hendren, who presented the bill, said the measure bundles “about 7 or 8 recommendations” from the tax reform task force and aims to modernize the state tax code while protecting general revenue. “This basically puts the EITC in place,” he said, describing a trust fund that will be seeded initially and used to deliver at least a 5% state EITC (a percentage of the taxpayer’s federal EITC) and other targeted tax relief.
Major elements of the bill include: a standard-rate reduction in the low-income table (eliminating a 2% bracket on the first band of income for taxpayers under roughly $22,200); an increase in the standard deduction to $3,300; creation of an EITC trust fund that initially funds a refundable…
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