An act TO CREATE THE INFLATION REDUCTION ACT OF 2025, the official text

Stricken language would be deleted from and underlined language would be added to present law.

1 State of Arkansas             As Engrossed: H2/19/25
2 95th General Assembly
                                      A Bill

3 Regular Session, 2025                                            HOUSE BILL 1065

4

5 By: Representatives Ray, Achor, Andrews, Barker, Beaty Jr., Beck, Bentley, S. Berry, Breaux, Brooks, A.

6 Brown, K. Brown, M. Brown, N. Burkes, R. Burkes, Joey Carr, John Carr, Cavenaugh, C. Cooper,

7 Cozart, Eaton, Eaves, Gonzales, Gramlich, Hawk, Holcomb, Hollowell, Hudson, Jean, Long, Lundstrum,

8 Lynch, Maddox, McAlindon, McClure, McCollum, McGrew, B. McKenzie, S. Meeks, Milligan, Pilkington,

9 R. Scott Richardson, Richmond, Rose, Rye, Schulz, Torres, Underwood, Unger, Wing, Wooten

10 By: Senator J. Dismang

11

12                              For An Act To Be Entitled

13  AN ACT TO CREATE THE INFLATION REDUCTION ACT OF 2025;

14  TO AMEND THE STATE INCOME TAX LAWS; TO REMOVE THE CAP

15  ON INCREASES TO THE STANDARD DEDUCTION AND INDIVIDUAL

16  INCOME TAX TABLES DUE TO INFLATION; TO TIE INCREASES

17  OF THE STANDARD DEDUCTION AND INDIVIDUAL INCOME TAX

18  TABLES TO A REGIONAL INDEX OF THE CONSUMER PRICE

19  INDEX; FOR OTHER PURPOSES.

20

21

22                              Subtitle

23                       TO CREATE THE INFLATION REDUCTION ACT OF

24                       2025.

25

26 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:

27

28  SECTION 1. DO NOT CODIFY. Title.

29  This act shall be known and may be cited as the "Inflation Reduction

30 Act of 2025."

31

32  SECTION 2. Arkansas Code � 26-51-201(d)(2), concerning the method of

33 annually adjusting the tables that determine the amount of individual income

34 tax due, is amended to read as follows:

35  (2) For purposes of subdivision (d)(1) of this section, the

36 cost-of-living adjustment for a calendar year is the percentage, if any, by

    *JLL075*                                                       02-19-2025 11:01:44 JLL075
    As Engrossed: H2/19/25                                                  HB1065

1 which the CPI for the current calendar year exceeds the CPI for the preceding

2 calendar year, not to exceed three percent (3%). The CPI for any calendar

3 year is the average of the Consumer Price Index as of the close of the

4 twelve-month period ending on August 31 of such calendar year. "Consumer

5 Price Index" means the last Consumer Price Index for All Urban Consumers the

6 West South Central division of the South Region published by the United

7 States Department of Labor.

8

9   SECTION 3. Arkansas Code � 26-51-430(c), concerning the indexing of

10 the standard income tax deduction to inflation, is amended to read as

11 follows:

12  (c)(1) The Secretary of the Department of Finance and Administration

13 shall increase annually the standard deduction provided under subsection (b)

14 of this section by the cost-of-living adjustment for the current calendar

15 year, rounding the amount to the nearest ten dollars ($10.00).

16           (2)(A)(i) For purposes of subdivision (c)(1) of this section,

17 the cost-of-living adjustment for a calendar year is the percentage, if any,

18 by which the Consumer Price Index for the current calendar year exceeds the

19 Consumer Price Index for the preceding calendar year, not to exceed three

20 percent (3%).

21                          (ii) If the Consumer Price Index for the current

22 calendar year does not exceed the Consumer Price Index for the preceding

23 calendar year, the standard deduction shall not be adjusted under this

24 subsection for that year.

25                (B) The Consumer Price Index for a calendar year is the

26 average of the Consumer Price Index as of the close of the twelve-month

27 period ending on August 31 of that calendar year.

28                (C) As used in this subsection, "Consumer Price Index"

29 means the most recent Consumer Price Index for All Urban Consumers the West

30 South Central division of the South Region published by the United States

31 Department of Labor.

32

33  SECTION 4. EFFECTIVE DATE. Sections 2 and 3 of this act are effective

34 for tax years beginning on or after January 1, 2025.

35

36                             /s/Ray

                               2                      02-19-2025 11:01:44 JLL075
         As Engrossed: H2/19/25                                                                                 HB1065
                                                                            02-19-2025 11:01:44 JLL075
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