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Senate committee advances bill to cap and phase down insurance premium tax credit
Summary
Senate Bill 345 would cap the insurance premium tax credit at $18,000,000 per company and phase the credit rate from 80% down to 50% over four years; sponsor said the change reduces the annual credit from about $43M to $27M by year four and described the proposal as an industry-supported compromise.
Senator Hendren presented Senate Bill 345 to the Senate Revenue & Tax Committee, describing it as a revision to the insurance premium tax credit that has existed in Arkansas for decades. He said the bill would set the credit at 80% in the first year with an $18,000,000 cap per company, then reduce the credit rate to 70%, 60% and 50% over a four-year phase-in.
Hendren said the change is aimed at aligning Arkansas with surrounding states and that the tax task force reviewed the credit and questioned whether the credit delivers value equal to its cost to taxpayers. He told the committee the industry participated in hearings and that representatives supported a compromise that phases the credit down to reduce the cost to the state.
The sponsor provided fiscal figures: he said the current credit translates to roughly $43,000,000 in total credits and that the proposal would lower that amount to about $27,000,000 by year four, producing an estimated net reduction of $16–17 million. He also noted that the rule changes would apply to calendar tax years.
After discussion and questions from committee members, Senator Ingram moved to pass the bill and Senator Bledsoe seconded. The committee took a voice vote; no roll-call tally was recorded in the transcript and the committee adjourned after the vote.
Senator Hendren characterized the proposal as a compromise that preserves some support for insurers while protecting more general revenue for other programs. Industry representatives were said to be present and supportive, but no individual industry witness was named in the transcript.
