SB352
To Create Income Tax Incentives For Employer-based Dependent Care Assistance; And To Create An Income Tax Credit For Employer Payments Related To Dependent Care Assistance.
Last Action (May 1, 2023): Sine Die adjournment
Sponsors
AI-Generated Summary
Senate Bill 352 creates an income tax credit for employers in Arkansas who provide dependent care assistance to their employees. To qualify, at least 50% of an employer's workforce must earn less than $55,000 annually. The credit is equal to 50% of the amount the employer excludes from an employee's income for dependent care assistance under federal law. The total amount of tax credits issued by the Arkansas Economic Development Commission is capped at $3 million per tax year, distributed on a first-come, first-served basis. Qualifying employers may carry forward unused credits for five years, and certain tax-exempt charitable organizations may receive the excess as a refund. Additionally, taxpayers are permitted to sell their earned tax credits to other parties. The bill also includes a cost-of-living adjustment mechanism for the employee wage eligibility threshold.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries are businesses that employ a large portion of lower-to-middle-income workers and provide them with dependent care assistance. Employees of these businesses benefit from potentially expanded access to or support for child and dependent care. Additionally, entities that purchase tax credits from eligible taxpayers may benefit from the ability to reduce their own state income tax liabilities.
Who Might Suffer?
The bill does not directly impose negative impacts on specific groups; however, the state government faces a reduction in general tax revenue due to the issuance of the credits. Furthermore, because the program is capped at $3 million annually and distributed on a first-come, first-served basis, businesses that apply late may be denied the incentive, potentially creating an uneven competitive environment for those that do not receive the credit compared to those that do.
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