The Arkansas Senate on Thursday voted to send the governor a handful of tax-cut measures, including a bill that would reduce the sales tax on used vehicles priced $4,000 to $10,000 from 6.5% to 3.5%.
In other action on Thursday, the House voted to send the governor a measure extending the sales-tax holiday to include electronic devices.
The Senate voted Thursday night for House Bill 1912 by Rep. John Payton, R-Wilburn, which would reduce the sales tax rate by 3% on used vehicles, trailers and semitrailers priced between $4,000 and $10,000.
The bill embodies Republican Gov. Asa Hutchinson's plan to reduce the tax rate on these vehicles. Payton has described it as a compromise with the Senate.
Earlier this month, the House approved Payton's House Bill 1160, which would have increased the tax exemption for used vehicles from those priced below $4,000 to those priced below $10,000 over a few years. The Senate Revenue and Taxation Committee on Monday amended that bill to exempt used vehicles priced between $4,000 and $7,500.
HB1912 is projected by the state Department of Finance and Administration to reduce state sales tax revenue by $6.5 million in fiscal 2022, which begins July 1, and $13.1 million in fiscal 2023. The bill would become effective Jan. 1. It wouldn't affect collections of city and county sales taxes, according to the finance department.
The Senate also voted on Thursday to send the governor:
• HB 1456 by Rep. Jeff Wardlaw, R-Hermitage, which would create an income tax credit for a railroad for track maintenance and modernization. The credit would be equal to 50% of track maintenance expenditures, according to the finance department.
The maximum amount of the credit is $5,000 per mile of track owned or leased by the railroad.
The bill would be effective for tax years starting on or after Jan. 1, 2021. The finance department projects it would reduce general revenue by up to $4.9 million in fiscal 2022.
• HB1196 by Rep. Craig Christiansen, R-Bald Knob, which would provide a sales and use tax exemption for sales of water used exclusively in the operation of a poultry farm. The bill is projected by the finance department to reduce sales tax revenue by $1.8 million in fiscal 2022 and $2.7 million in fiscal 2023.
• HB1157 by Rep. David Tollett, R-Lexa, which would increase an income tax deduction from $250 to $500 per taxpayer for qualified classroom investment expenses by a teacher. The bill is projected to reduce general revenue by $237,000 in fiscal 2022.
In a 93-0 vote on Thursday, the House approved Senate Bill 181 by Sen. Trent Garner, R-El Dorado, which would expand the sales tax holiday to include electronic devices, effective July 1.
State law provides a sales-tax holiday for clothing, clothing accessories or equipment, school art supplies, school instructional materials and school supplies. The bill is projected by the finance department to reduce tax revenue by $1.95 million in fiscal 2022.