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HB 1787

TO PROVIDE AN INCOME TAX EXEMPTION FOR CERTAIN RETIREMENT BENEFITS RECEIVED BY LAW ENFORCEMENT OFFICERS AND FIREFIGHTERS.

2025 Regular Session Introduced by Les Warren

HB 1787 would exempt retirement benefits from state income tax for Arkansas' retired law enforcement and firefighters, easing their financial burden starting in 2026.

Died in House Committee at Sine Die adjournment.
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Bill Summary · HB 1787

Summary of House Bill 1787 (HB 1787)

Purpose and Intent

House Bill 1787 (HB 1787) was introduced to provide an income tax exemption for certain retirement benefits received by law enforcement officers and firefighters in the state of Arkansas. The bill aimed to alleviate the tax burden on these public service professionals, recognizing their contributions to public safety.

Key Provisions

  • Income Tax Exemption: The bill proposed to exempt retirement benefits from state income tax for:

    • Retired firefighters from municipal or volunteer fire departments and the Arkansas National Guard.
    • Retired law enforcement officers, including:
    • Police officers from municipal police departments.
    • County sheriffs and deputy sheriffs.
    • Members of the Arkansas State Police.
    • Personnel from the Arkansas Highway Police Division.
    • Officers of state or local detention facilities.

  • Exemption Limits:

    • Retirees with qualifying benefits under $6,000 could claim an exemption on other retirement income up to the $6,000 threshold.
    • Those with qualifying retirement benefits over $6,000 would forgo the general exemption on other retirement benefits.

  • Effective Date: The provisions of the bill were set to take effect for tax years beginning on or after January 1, 2026.

Fiscal Impact

  • The bill was projected to reduce general revenue by:
    • FY 2026: $2.5 million
    • FY 2027 and beyond: $5 million annually
  • This fiscal impact was based on data from pension withholding tax filings indicating approximately 10,000 retirees receiving $213 million in benefits, with $5 million withheld annually.

Affected Parties

  • The primary beneficiaries of HB 1787 would have been retired law enforcement officers and firefighters in Arkansas. The bill aimed to provide financial relief to these individuals, many of whom rely on fixed retirement incomes.

Procedural Aspects

  • Legislative Journey:

    • Introduced on March 13, 2025.
    • Read and referred to the Committee on Revenue & Taxation.
    • Died in the House Committee at Sine Die adjournment on May 5, 2025.

  • Implementation Requirements: If passed, the Department of Finance and Administration would need to update computer programs, tax forms, and provide education to department employees and the tax community regarding the new exemption.

Legal Considerations

  • The bill faced potential constitutional challenges related to intergovernmental tax immunity, as it did not extend the same tax treatment to federal law enforcement officers and firefighters. This could lead to claims of discrimination based on the source of retirement benefits.

Conclusion

While HB 1787 aimed to provide significant tax relief to retired law enforcement officers and firefighters in Arkansas, it ultimately did not progress through the legislative process and was not enacted. The proposed changes highlighted ongoing discussions about the financial treatment of public service retirees and the implications of tax policy on various groups.

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

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