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A look at the new tax legislation for 2022 in Arkansas

As we say goodbye to 2021, there are a few tax changes coming to Arkansas in the new year.

LITTLE ROCK, Ark. — In the regular and most recent session, the Arkansas general assembly passed several acts that could impact your income.

We already know are ready for a "new year, new you."

However, when the clock strikes midnight, January 1, 2022 will mark the first day of the new tax legislation.

The new state laws will "reduce the top income tax rate for individuals from 5.9% to 4.9% incrementally over the next four years. For the tax year beginning on January 1, 2022, the top rate is reduced to 5.5%. The legislation also provides a $60 non-refundable tax credit for individuals with an income of less than $24,700."

If you are in the market for a used car, next year could be your year.

According to the new legislation, "ACT1013 reduces the sales tax from 6.5% to 3.5% on used cars priced from $4,000-$10,000" and "ACT376 reduces the additional registration fee for a hybrid vehicle from $100 to $50.00."

When it comes to solving cold cases in Arkansas, sometimes the Arkansas State Police needs extra help.

"ACT841 creates an income tax credit for retired law enforcement officers who work on behalf of the Division of Arkansas State Police to investigate cold cases."

Below is a look at the remaining legislation that will take effect in Arkansas in 2022.

  • ACT765 creates the Law Enforcement Family Relief Check-off Program, which allows an individual taxpayer to designate some or all of the taxpayer's income tax refund to the program, which assists the family of an Arkansas-certified law enforcement officer who was killed in the line of duty or diagnosed by a medical professional with a terminal illness.
  • ACT369 modifies the method of calculating the stabilization tax in certain circumstances and provides that, for the year beginning January 1, 2022, and ending December 31, 2022, the stabilization tax shall be capped at .2%.
  • ACT368 modifies the definition of "wages" in certain circumstances under the Division of Workforce Services Law for the rate year beginning January 1, 2022, and ending December 31, 2022, to exclude the amount of remuneration that exceeds the lesser of the amount calculated under current law or $10,000.
  • ACT362 creates the Elective Pass-Through Entity Tax Act, which allows pass-through entities to elect to have their income be subject to the pass-through entity tax instead of the state income tax.
  • ACT765 creates the Law Enforcement Family Relief Check-off Program, which allows an individual taxpayer to designate some or all of the taxpayer's income tax refund to the program, which assists the family of an Arkansas-certified law enforcement officer who was killed in the line of duty or diagnosed by a medical professional with a terminal illness.

You can find the legislation and video archives of the presentations and votes on the legislation at www.arkansashouse.org.

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