LITTLE ROCK — The Arkansas Senate voted 29-0 Thursday to approve and send to Gov. Asa Hutchinson’s desk his proposed $13.4 million tax break for retired military veterans.
Hutchinson said Thursday he expects to sign the bill into law Tuesday.
House Bill 1162 by Rep. Charlene Fite, R-Van Buren, would exempt military retirement and survivor benefits from the state income tax. It passed Monday in the House in a 75-14 vote.
The bill also includes a provision that would reduce the state’s special excise tax on soft-drink syrup, a tax that generates revenue for the state Medicaid program and that Hutchinson has said was intended originally to be temporary.
HB 1162 would transfer $5.9 million a year from general revenue to the Medicaid program to offset the tax reduction.
To offset the veterans’ tax break and the transfers to Medicaid, the bill would repeal a state income tax exemption on unemployment compensation; end the classification of candy and soft drinks as groceries so the state sales tax on them would increase from 1.5 percent to 6.5 percent; and levy a sales tax on digital downloads of movies, books and ringtones.
A matching Senate bill by Sen. Jane English, R-North Little Rock, cleared the Senate on Tuesday but has not yet received a vote in the House Revenue and Taxation Committee.