Removing the cap on the income tax cost of living adjustment due to inflation
Bill Primary sponsors
Full Bill Title
To create the Inflation Reduction Act of 2023.
What it does
Functionally, this would reduce the amount of income tax owed by Arkansans by removing a 3% cap on the cost of living adjustment due to inflation. Right now, the law reads:
“the cost-of-living adjustment for a calendar year is the percentage, if any, by which the CPI [consumer price index] for the current calendar year exceeds the CPI for the preceding calendar year, not to exceed three percent (3%).”
This bill would remove the “not to exceed 3%,” thereby removing that cap. Basically, since most consumers are facing inflation greater than 3%, this bill would allow for higher adjustment.
Of course, there will be a fiscal impact statement that accompanies this bill. We will include that will available.
This bill also changes the reference for the Consumer Price Index from “All Urban Consumers” to “the West South Central Division of the South Region” as published by the United States Department of Labor. This just brings it more in line with prices Arkansans are seeing as opposed to prices in other parts of the country.
Options: Filed, on agenda, passed, failed… (more)
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