Bill Summary for HB1015

• Bill Number: HB1015
• Primary Sponsor: Representative A. Collins
• Purpose: To establish a refundable income tax credit for dependent children in Arkansas.

Key Provisions:

1. Dependent Child Tax Credit:

• Amount: $300 per qualifying child.
• Eligibility:
  • For taxpayers with net income:
    • Up to $100,000 for single filers.
    • Up to $200,000 for joint filers.
  • Defined "qualifying child" follows the federal definition under 26 U.S.C. §152(c), limited to children under 18 by the end of the taxable year.

2. Cost-of-Living Adjustment:

• The tax credit amount will be adjusted annually based on the Consumer Price Index (CPI). If the CPI does not increase, the credit remains unchanged.

3. Refundability:

• If the credit amount exceeds a taxpayer's total income tax liability, the excess will be refunded to the taxpayer.

4. Effective Date:

• The tax credit applies to tax years beginning on or after January 1, 2025.

Existing Child Tax Credits in Arkansas:

• Currently, Arkansas does not have a state-level child tax credit.
  • Federal child tax credit exists, offering up to $2,000 per qualifying child, with $1,600 potentially refundable (2023 figures). States like Oklahoma, New York, and California offer their own versions of child tax credits, some of which are refundable.

Layman’s Terms Summary:

HB1015 creates a $300 tax credit per dependent child for Arkansas taxpayers earning under certain income thresholds. This credit is refundable, meaning families can receive the full benefit even if their tax liability is zero. The credit amount adjusts yearly for inflation and aims to support families with the costs of raising children. This represents Arkansas's first state-level child tax credit.