HB1708
The Keep The Bonus, Axe The Tax: The No-tax Bonus Act.
Last Action (May 5, 2025): Died in House Committee at Sine Die adjournment.
Sponsors
AI-Generated Summary
House Bill 1708, titled the 'Keep the Bonus, Axe the Tax: The No-Tax Bonus Act,' proposes an amendment to the Arkansas Code to exempt employee bonuses from state income tax. The bill defines a 'bonus' as a nonrecurring payment that is separate from regular or overtime wages, does not increase base pay, and does not carry a commitment for future payments. If enacted, this legislation would make these qualifying bonuses free from state income tax liability. The provisions of this act are scheduled to apply to tax years beginning on or after January 1, 2026. The primary purpose of the bill is to provide tax relief on specific one-time financial incentives provided to employees.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries are employees who receive nonrecurring bonuses, as they would see an increase in their take-home pay by avoiding state income tax on these payments. Additionally, employers might benefit as the tax-exempt status of bonuses could serve as a more attractive financial incentive for recruitment and retention.
Who Might Suffer?
The primary entity negatively impacted would be the State of Arkansas, which would experience a reduction in general revenue due to the elimination of income tax collections on these bonus payments. This potential decrease in state tax revenue could impact the state budget and the funding available for public services and programs.
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