Arkansas Gov. Sarah Huckabee Sanders, legislative leaders call for cutting income taxes by $124 million

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Arkansas Gov. Sarah Huckabee Sanders and legislative leaders on Thursday called for cutting income taxes by $124 million as they near the end of this year's legislative session.

The tax cut proposal calls for cutting the state's top individual income tax rate from 4.9% to 4.7% starting this year. It would also cut the top corporate income tax rate from 5.3% to 5.1%.

"Arkansans will feel this tax relief immediately, and I don't think it could come fast enough," Sanders said at a news conference at the state Capitol

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State finance officials said 1.1 million taxpayers who make more than $24,300 a year would receive a cut under the proposal.

Sanders, a Republican who took office in January, has called for phasing out the state's income tax. Sanders' Republican predecessor, former Gov. Asa Hutchinson, and the majority-GOP Legislature enacted a series of cuts over the past several years.

Sarah Huckabee Sanders, governor of Arkansas, speaks at the Arkansas State Capitol in Little Rock, on Feb. 8, 2023. Sanders and other state legislative leaders want to cut income taxes by $124 million. (Al Drago/Bloomberg via Getty Images)

The push for further tax cuts comes after Arkansas ended last fiscal year with a $1.6 billion surplus. The state's revenue for the fiscal year so far has come in $250 million higher than forecast.

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Legislative leaders introduced the tax cut legislation as they hope to wrap up this year's legislative session by early April. The session's remaining agenda includes the state's budget and Sanders' call to set aside $470 million for 3,000 more prison beds.

Democrats, however, said the tax cuts over the years have come at the expense of other needs such as education and health care.

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"If we continue down this path of phasing out the income tax, we won’t have the resources to deal with these issues and pay for our essential services without raising other types of taxes, like sales taxes and property taxes," House Minority Leader Tippi McCullough said in a statement.