Senator Teague provides update from Little Rock

The Arkansas State Senate has voted to exempt last year’s unemployment benefits from state income taxes, to help people who lost their jobs because of the economic impact of the Covid-19 pandemic.
Senate Bill 236 would apply to benefits paid in 2020 and 2021. The unemployment rate in Arkansas had been around four percent until the coronavirus pandemic caused widespread business closures, especially in hospitality, tourism and travel. The jobless rate spiked to around 10 percent before it began to improve.

Before the pandemic, about 44,000 people in Arkansas claimed unemployment in 2018 and 2019, a state revenue official told senators during a committee hearing on SB 236. Last year more than 281,000 people filed for unemployment, according to the Department of Workforce Services.

SB 236 will save those people more than $51 million in state income taxes when they file this year, the revenue official said.

The next step is for the bill to be considered by a House committee, and if advanced out of committee, to be voted on by the entire House.

Sate Senator Larry Teague of Nashville serves on the Revenue & Tax Committee. He says state tax revenue in January was collected at record rates. Tax rates have not gone up, therefore the increase is an indication that the Arkansas economy is rebounding from the negative impact caused by the Covid-19 pandemic.
The state now has a surplus of about $400 million after the first seven months of the fiscal year. During the 2021 session legislators will decide how best to use the surplus. For example, the $51 million in income tax exemptions for unemployment benefits, written into SB 236, can be absorbed by the state because of the large surplus.