House committee advances bill to cut Arkansas income tax to 3.7% after public testimony opposing reductions

A House committee voted to advance House Bill 1,001 after a day of testimony that included multiple speakers urging lawmakers to reject further tax cuts amid competing budgetary needs.

Representative Les Eves, the bill's sponsor, told the committee the measure "lowers the personal income tax rate to 3.7" and would reduce the corporate rate to 4.1% as of 2027. He said the change would be retroactive this year and described it as "broad-based tax relief for everyday Arkansans," saying income above $26,400 in the lower table would be taxed at the new 3.7% rate. Eves said the cumulative effect of prior state tax reductions means a typical household already sees substantial savings and that HB 1,001 would continue that trajectory.

Public testimony was largely opposed. Anna Morchetti, policy director at Arkansas Appleseed Legal Justice Center, told the committee the state faces substantial investment needs in education and other critical services and questioned whether a roughly $180,000,000 tax cut is affordable. "In order for Arkansas's public education spending to match the national average, we'd need to increase our per student spending by 30%," she said, and cited a shortfall she put at roughly $674,000,000 per year to reach parity with peers.

Missy Wyatt Joyce described her son Hunter's reliance on home- and community-based supported living and urged the committee not to cut revenue while those services are underfunded. "The 2025 rate study that you mandated shows it is 23% underfunded," she said, and testified that Hunter's nonprofit provider operated at an $8,000,000 deficit in 2025.

Preston Clegg, pastor of Second Baptist Church in Little Rock, and Michelle Pedro of the Arkansas Coalition of Marshallese also warned that reduced revenue could worsen rural hospital closures, food insecurity and loss of benefits, arguing modest tax savings would not offset those harms.

Pete Gus, economic policy director at Arkansas Advocates for Children and Families, said rising costs and federal funding shifts increase pressure on the state budget and that fiscal-note modeling shows many lower-income earners would see little or no benefit while higher earners capture the bulk of savings. "The top 20% of earners will receive 80% of the tax benefit," he said.

In closing, Representative Eves told the panel the bill would not cut services and that past cuts produced surpluses; he moved that the committee pass HB 1,001. Representative Wright spoke in favor of the measure, arguing cumulative tax relief benefits working families and supports state growth. The committee first approved a procedural motion to limit debate to five minutes per side and then, by voice vote, an advancement motion on HB 1,001. The chair announced the bill had passed the committee and adjourned the meeting.

The committee record does not show a roll-call tally naming individual yes or no votes; the outcome announced in the room was that the motion to pass HB 1,001 carried.