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Arkansas governor signs bill cutting top income tax rate

by The Associated Press | February 19, 2019 at 3:20 p.m. | Updated February 19, 2019 at 6:18 p.m.
FILE - Gov. Asa Hutchinson (left) is joined by House Speaker Matthew Shepherd on Jan. 30 as he announces his “5.9 plan” for cutting income-tax rates.

LITTLE ROCK — Arkansas' governor on Tuesday signed into law his $97 million plan to cut the state's top income tax rate, and said he wants legislators to address highway funding before looking at any other tax reductions during this year's session.

Republican Gov. Asa Hutchinson signed the bill outlining his proposal to cut the state's top income tax rate from 6.9 percent to 5.9 percent over the next two years. The proposal won final approval last week in the majority-Republican Legislature.

Hutchinson won re-election last year on a promise to push for more tax cuts. The Legislature approved Hutchinson's proposals to cut taxes for low- and middle-income residents during his first term in office.

"This adds to our favorable climate for businesses to locate here, as well as the right way to treat the citizens who live here," Hutchinson said before signing the bill.

State finance officials say approximately 579,000 taxpayers with net taxable incomes of $38,200 will receive a cut under the proposal, though critics have said the benefits are skewed heavily toward the state's highest earners.

Legislative leaders said they expect to take up other recommendations from a task force that was formed to look at the state's tax code, including corporate income tax cuts. Hutchinson said he's open to considering more changes, but that his $300 million highway funding plan needs to be addressed first. A Senate panel is expected to take up part of the funding plan on Wednesday.

[RELATED: Complete Democrat-Gazette coverage of the Arkansas Legislature]

"I think everybody wants to make sure we get that passed before we consider additional steps," Hutchinson said.

Legislative leaders said any additional cuts or tax changes would be proposed in conjunction with legislation allowing the state to collect sales tax on online purchases from out-of-state retailers.

"There are a lot of reforms left to do and we'll see more tax bills coming," Senate President Jim Hendren said.

Read Wednesday's Arkansas Democrat-Gazette for full details.


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