Senate committee advances bill to cut Arkansas individual income tax to 3.7% amid public opposition

A Senate committee advanced a proposal to lower Arkansas's individual income tax rate to 3.7% on a voice vote after a half-hour of testimony from advocates, parents and nonprofit policy experts who urged lawmakers to reject the measure.

The bill, identified in the hearing as Senate Bill 1, was introduced as part of a multiyear effort to reduce income tax rates that the sponsor said began in 2013. The sponsor told the committee the measure would be retroactive to Jan. 1, 2026, for personal income tax and that corporate changes would take effect the following January. The sponsor said the change builds on past reductions and argued the state can absorb the cut from current surpluses without cutting essential services.

Why it matters: Testimony from clergy, parents and policy advocates emphasized that state revenue funds schools, health care, food assistance and services for people with disabilities. Opponents said the proposed tax cut would reduce the state's ability to invest in those services at a time of growing needs.

"I respectfully urge you to reject additional tax cuts at this time and instead prioritize critical programs that Arkansans depend on every day," said Reverend Haley Jones Wells of First United Methodist Church in Little Rock during public comment.

Parent Missy Wyatt Joyce described her son's reliance on home- and community-based supported-living services and cited a state rate study. "The 2025 rate study shows it is 23% underfunded," Joyce said, arguing that turnover and unpaid overtime at providers undermine continuity of care. Joyce said some supported-living providers operated with large deficits in 2025 and asked lawmakers to prioritize funding before further tax reductions.

Advocacy groups made similar budgetary arguments. "The top 20% of earners will receive 80% of the tax benefit," said Pete Gess, economic policy director at Arkansas Advocates for Children and Families, citing fiscal-note findings and a recent poll. Anna Morchetti, policy director for Arkansas Appleseed Legal Justice Center, said the state spends roughly $4,000 less per student than the national average and questioned whether Arkansas can afford a $180,000,000 tax cut while addressing education and early-childhood wait lists.

Sponsor response and committee debate: The sponsor reiterated the bill's stated goals and defended the measure as a continuation of prior rate reductions that prioritized lower-income brackets earlier in the reform sequence. The sponsor offered a ballpark example for context, saying a person making $65,000 would have had a tax liability of about $3,638 in 2013 versus just above $2,000 today, and described that as roughly a 45% decrease in effective liability since 2013, while noting the Department of Finance and Administration (DFA) could verify details.

Committee members discussed the trade-offs between maintaining competitiveness and funding essential services. Senator Petty and others acknowledged the needs described by witnesses while arguing the state must seek a balance that supports economic competitiveness.

Vote and next step: A motion to advance the bill was made and seconded; the committee passed the motion by voice vote with no recorded opposition and adjourned. The committee did not record roll-call votes in the transcript.

What is not in the record: The committee hearing transcript does not include a roll-call tally or the detailed DFA fiscal-note calculations; the sponsor repeatedly referred members to DFA for verification. The transcript also uses several variant spellings of some names and sponsor identifiers; quotes in this article are attributed to the speaker text as recorded in the hearing transcript.

The committee adjourned after the voice vote to advance the bill.