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HB 1438

TO CREATE AN INCOME TAX CREDIT FOR TAXPAYERS SIXTY-FIVE AND OLDER IN AN AMOUNT EQUAL TO THE TAXPAYER'S PROPERTY TAX PAYMENT ON A HOMESTEAD.

2025 Regular Session Introduced by Fran Cavenaugh

HB 1438 proposed a refundable income tax credit for Arkansas seniors 65+ equal to their homestead property tax, easing financial burdens and potentially providing refunds.

Died in House Committee at Sine Die adjournment.
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Bill Summary · HB 1438

Summary of House Bill 1438

Bill Number: HB 1438
Title: To Create an Income Tax Credit for Taxpayers Sixty-Five and Older in an Amount Equal to the Taxpayer's Property Tax Payment on a Homestead
Status: Died in House Committee at Sine Die adjournment
Introduced: February 10, 2025
Sponsor: Representative Cavenaugh

Purpose and Intent

House Bill 1438 aimed to provide financial relief to senior citizens in Arkansas by establishing a refundable income tax credit for taxpayers aged 65 and older. The credit would be equal to the amount of property tax paid on their homestead, thereby alleviating some of the financial burdens associated with property taxes for older residents.

Key Provisions

  • Eligibility: Taxpayers aged 65 years and older who pay property taxes on their homestead.
  • Credit Amount: The credit would equal the real property tax paid during the tax year, excluding any amounts for delinquent property taxes or penalties.
  • Refundable Credit: If the credit exceeds the taxpayer's income tax liability, the excess amount would be refunded to the taxpayer.
  • Effective Date: The provisions of the bill would apply to tax years beginning on or after January 1, 2025.

Fiscal Impact

  • Projected Revenue Reduction:
    • FY2026: $202 million
    • FY2027: $185 million
  • The fiscal impact estimates are based on data from the Assessment Coordination Division of the Department of Finance and Administration, considering the number of taxpayers eligible for the existing 65 and over homestead tax credit.

Impact on Taxpayers

  • Eligible taxpayers would benefit from a direct reduction in their income tax liability, potentially receiving a refund even if they had no taxable income.
  • The bill could simplify the tax process for seniors by providing a straightforward credit rather than requiring itemized deductions.

Procedural and Implementation Aspects

  • Required Changes:
    • Updates to individual income tax forms and instructions.
    • Education for department employees and the tax community regarding the new credit.
    • Modifications to county software systems to accommodate the new tax credit.
  • Estimated Costs: Implementation would require approximately $360,000 for programming costs and ongoing maintenance of $45,000 per year.

Legislative Actions

  • The bill was filed on February 10, 2025, and subsequently referred to the Committee on Revenue & Taxation. However, it ultimately died in the House Committee on May 5, 2025, at Sine Die adjournment.

Additional Considerations

  • The bill did not clarify whether taxpayers could still claim a deduction for property taxes if they received the refundable credit.
  • Amendments were suggested to clarify documentation requirements and eligibility for multiple taxpayers claiming the credit on the same property.

This summary provides an overview of HB 1438, highlighting its intent to support senior taxpayers in Arkansas through a property tax-related income tax credit.

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

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