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HB 1708

Professions and occupations; bail bondsman; definitions; cash bail bondsman; effective date.

2025 Regular Session Introduced by Rande Worthen

Arkansas HB 1708 exempts nonrecurring, bonus payments from state income tax starting 2026, boosting take-home pay for affected employees and prompting payroll/form updates.

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Bill Summary · HB 1708

Summary — HB 1708 (composite materials provided)

Note on source materials
- The documents you provided contain multiple, conflicting versions of a bill numbered HB 1708 from different states and topics (notably: an Arkansas income‑tax change titled “Keep the Bonus, Axe the Tax: The No‑Tax Bonus Act”; an Illinois elections bill about ranked ballots; and other procedural entries). The most complete substantive text and fiscal analysis in the packet concerns the Arkansas version that exempts employee bonuses from state individual income tax. The summary below focuses on that Arkansas HB 1708 and highlights fiscal and implementation details included in the Department of Finance & Administration (DFA) fiscal impact statement. If you intended a different HB 1708 (for example, the “Kemper County; authorize contributions to Philadelphia Transit” local/private bill noted in your header), please confirm and supply that text — I can then prepare a separate, targeted summary.

Purpose and intent

HB 1708 (Arkansas) — titled the “Keep the Bonus, Axe the Tax: The No‑Tax Bonus Act” — creates a state individual income tax exemption for certain employee bonus payments. The intent is to exclude qualifying, nonrecurring bonus payments from Arkansas taxable income to increase take‑home pay for employees receiving such bonuses.

Key provisions

  • Adds a new section to Arkansas Code (proposed 26‑51‑317) that:
    • Defines “bonus” as a payment to an employee that:
    • Is in addition to the employee’s regular or overtime wages;
    • Is nonrecurring;
    • Does not increase the employee’s base rate of pay; and
    • Includes no commitment for payment in a subsequent year.
    • Declares that a bonus, as defined above, is exempt from the Arkansas individual income tax levied under Title 26.
  • Effective date: applies to tax years beginning on or after January 1, 2026.

Who is affected

  • Employees of Arkansas employers who receive one‑time, nonrecurring bonuses that meet the statutory definition (e.g., hiring bonuses, end‑of‑year or performance bonuses, longevity payments that are nonrecurring and do not raise base pay).
  • Employers are indirectly affected only to the extent that payroll reporting and withholding may change for exempt bonus payments.
  • State tax administration (Department of Finance & Administration) — must update forms, instructions, and computer systems and educate staff and the tax community.

Fiscal impact (as provided by DFA)

  • Estimated General Revenue reductions:
    • FY2026: $16.3 million
    • FY2027: $32.6 million
  • Basis of estimate: Assumes average Arkansas income of $51,250 and average bonus equal to 2.8% of income ($1,435). Estimated approximately 650,000 Arkansas taxpayers receive some form of bonus; multiplying average bonus by that population yields roughly $32.6M revenue loss in a full year.
  • Implementation cost: one‑time programming updates estimated at about $4,000.
  • Administrative impacts: updates to tax forms/instructions and staff training required.

Implementation & procedural details

  • Effective for tax years beginning on or after January 1, 2026 (i.e., impacts tax year 2026 filings).
  • DFA noted adequate time for implementation but will require rule/document updates and outreach.

Procedural/Document conflicts and next steps

  • The packet includes other HB 1708 texts (Illinois ranked‑ballot changes; unrelated Indiana/other procedural entries). Legislative action dates in the materials are mixed and appear to reference multiple jurisdictions. The header you provided (“Kemper County; authorize contributions to Philadelphia Transit” / Local & Private) does not match the Arkansas revenue bill text in the DFA statement.
  • Please confirm which jurisdiction and bill text you want summarized (Arkansas No‑Tax Bonus Act vs. the Kemper County local/private bill vs. the Illinois ranked‑ballot bill). I can then produce a focused summary for that specific bill and jurisdiction, including any additional procedural status details.

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

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