LITTLE ROCK — A bill to exempt military retirement benefits from the state income tax cleared a House committee Thursday.
The House Revenue and Taxation Committee gave a “do pass” recommendation to House Bill 1162 by Rep. Charlene Fite, R-Van Buren.
The proposed tax exemption, part of Gov. Asa Hutchinson’s policy agenda for the session, is paired in the bill with a reduction in the state’s soft-drink syrup tax. Three other provisions are aimed at offsetting the costs of the tax breaks and making the bill what legislators call “revenue-neutral.”
As it was originally filed, the proposed offsets included repeal of a state income tax exemption on unemployment compensation; application of the full state sales tax to candy and soft drinks instead of the current 1.5 percent rate for groceries; and application of the full state sales tax on manufactured housing instead of the current 62 percent.
The provision on manufactured housing met with political resistance, so the bill was amended earlier this week to replace that provision with one to remove a state sales tax exemption on digital downloads of items such as movies, books and music.
The bill goes next to the House.