Arkansas lawmakers OK massive tax cuts, adjourn session

LITTLE ROCK, Ark. (AP) — Arkansas lawmakers on Thursday approved the largest tax cut in state history, adjourning a special session without taking up an abortion ban modeled after Texas’ or other measures some Republican lawmakers hoped to add to the agenda.

The House and Senate approved legislation that would cut taxes by nearly $500 million once fully implemented in 2026. The proposal calls for gradually cutting the top individual income tax rate from 5.9% to 4.9% in 2025. It also includes corporate income tax cuts and a low-income tax credit.

Democrats and advocacy groups warned that the cuts could strain resources in the state and that the state should instead focus on increasing funding for needs such as services for the developmentally disabled. Critics have also said the tax cuts are skewed more toward the state’s higher earners.

Hours after the adjournment, Republican Gov. Asa Hutchinson signed the legislation into law and noted the impact on low-income residents.

“There’s 100,000 Arkansans that were paying taxes that will have their taxes eliminated because of this reform effort,” Hutchinson said. “I think it’s poor form for someone to diminish a tax cut even though it’s small. For an individual who happens to be paying a small portion of taxes, percentage-wise they’re getting a larger cut in their taxes.”

Hutchinson called the session once legislative leaders said there were more than enough votes to pass the tax cut package. The cuts come after the state reported a nearly $1 billion surplus in July and as revenue this year has come in above the state’s expectations.

Hutchinson, who is barred by term limits from seeking reelection next year, has successfully pushed for a series of income tax cuts since taking office in 2015. Former White House Press Secretary Sarah Sanders, the only Republican running to succeed him after others dropped out, has vowed to push for eliminating the individual income tax altogether if elected.

The majority-Republican Legislature adjourned despite efforts by some GOP lawmakers to include other items, including an abortion ban like the Texas one that’s being argued before the Supreme Court. It would have taken a two-thirds vote of both chambers to extend the session up to 15 days for bills that weren’t on the initial agenda, including the abortion ban.

“They had a focus on tax cuts and the agenda that was called and they did their business. I am grateful that did not have an extended session,” said Hutchinson, who has noted that a challenge to Texas’ ban is pending before the U.S. Supreme Court.

The Legislature approved several other items Hutchinson placed on the session’s agenda, including incentives to help lure a steel mill expansion to east Arkansas.

The Legislature isn’t set to meet again until February, for a session focused primarily on the state budget.