Arkansans may see an increase in the amount of their paychecks this year. The Arkansas Department of Finance and Administration (DFA) announced in December the income tax withholding tables would change last Friday.
The Arkansas House of Representatives reports in a news release DFA officials say this change is not a tax increase or cut. But, with the law change that reduces the top personal income tax rate from 6.6% to 5.9% in January, the withholding change will put that reduction in paychecks beginning January 2021. Without this change, many Arkansans wouldn’t see the bulk of their tax cut until they received it in their tax refund in 2022.
This is the second change DFA has recently implemented to the withholding tables. The first adjustment took place March 1. The March 2020 adjustment put $15 million each month into the pockets of Arkansans via increased paychecks. The January 2021 adjustment will place an additional $7 million each month into paychecks.
The law that reduced the tax rate was Act 182 passed by the 92nd General Assembly. The release from the Arkansas House notes it is expected the 93rd General Assembly will address further tax cut proposals.
Several pieces of legislation addressing future tax cuts have been filed in advance of the 2021 Regular Session set to begin Jan. 11.
The latest revenue report shows receipts are 11.4% higher than this time in 2019. Five months into the fiscal year, revenue is now $283.3 million above forecast.
Last month, reports noted the state’s unemployment rate remained stable at 6.2% between October and November. The national unemployment rate is at 6.7%.
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