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HB 1540

CONTROLLED SUB-SCHEDULE II

104th Regular Session Introduced by Amy Grant and 3 co-sponsors

HB 1540 aimed to double the tax credit for caregivers of children with developmental disabilities from $500 to $1,000 while repealing a $500 deduction.

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Bill Summary · HB 1540

Summary of House Bill 1540

Bill Number: HB 1540
Title: To Amend the Income Tax Credit and the Income Tax Deduction Related to Maintaining, Supporting, and Caring for an Individual with a Disability
Status: Died in House Committee at Sine Die adjournment
Introduced: February 20, 2025
Sponsors: Rep. Mayberry and K. Brown

Purpose and Intent

House Bill 1540 aimed to amend existing tax provisions in Arkansas concerning the financial support provided to taxpayers caring for individuals with disabilities. The bill sought to enhance the income tax credit available for caregivers while repealing an existing tax deduction.

Key Provisions

  1. Repeal of Tax Deduction:

    • The bill proposed the repeal of the $500 income tax deduction for taxpayers caring for a totally and permanently disabled child, as outlined in Arkansas Code § 26-51-418.

  2. Increase in Tax Credit:

    • The income tax credit under Arkansas Code § 26-51-503 was set to increase from $500 to $1,000 for taxpayers providing care to a child with a developmental disability.

  3. Expanded Definitions:

    • The definition of a qualifying “individual” was expanded to include dependents as defined in § 26-51-501(a)(3)(B).
    • The bill aimed to clarify the types of medical professionals authorized to diagnose developmental disabilities.
    • The definition of "developmental disability" was aligned with federal standards (42 U.S.C. § 15002), ensuring it included severe, chronic disabilities manifesting before age 22.

  4. Effective Date:

    • The changes proposed in the bill were intended to take effect for tax years beginning on or after January 1, 2025.

Fiscal Impact

  • The bill was projected to reduce General Revenue by:
    • FY2026: $10 million
    • FY2027: $10.8 million
    • FY2028: $11.6 million
  • The fiscal impact was based on an estimated increase in claims for the enhanced disability credit, with an anticipated additional 800 claims filed annually.

Taxpayer Impact

  • Taxpayers caring for individuals with developmental disabilities would benefit from an increased tax credit, effectively doubling the amount they could claim from $500 to $1,000.

Implementation Considerations

  • The Department of Finance and Administration would need to update computer programs, tax forms, and instructions, with an estimated implementation cost of $8,000.
  • Adequate time was provided for the necessary updates and education for department employees and the tax community.

Legislative Actions

  • The bill underwent several legislative actions, including amendments and readings, but ultimately died in the House Committee on May 5, 2025.

This summary provides an overview of HB 1540, detailing its intent, provisions, fiscal implications, and the legislative process it underwent.

Compiled from official sources — confirm details with the bill’s official record.

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