Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1065 3
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By: Representative Ray 5
By: Senator J. Dismang 6
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For An Act To Be Entitled 8
AN ACT TO CREATE THE INFLATION REDUCTION ACT OF 2025; 9
TO AMEND THE STATE INCOME TAX LAWS; TO REMOVE THE CAP 10
ON INCREASES TO THE STANDARD DEDUCTION AND INDIVIDUAL 11
INCOME TAX TABLES DUE TO INFLATION; TO TIE INCREASES 12
OF THE STANDARD DEDUCTION AND INDIVIDUAL INCOME TAX 13
TABLES TO A REGIONAL INDEX OF THE CONSUMER PRICE 14
INDEX; FOR OTHER PURPOSES. 15
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Subtitle 18
TO CREATE THE INFLATION REDUCTION ACT OF 19
2025. 20
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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 22
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SECTION 1. DO NOT CODIFY. Title. 24
This act shall be known and may be cited as the "Inflation Reduction 25
Act of 2025." 26
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SECTION 2. Arkansas Code § 26 -51-201(d)(2), concerning the method of 28
annually adjusting the tables that determine the amount of individual income 29
tax due, is amended to read as follows: 30
(2) For purposes of subdivision (d)(1) of this section, the 31
cost-of-living adjustment for a calendar year is the percentage, if any, by 32
which the CPI for the current calendar year exceeds the CPI for the preceding 33
calendar year, not to exceed three percent (3%) . The CPI for any calendar 34
year is the average of the Consumer Price Index as of the close of the 35
twelve-month period ending on August 31 of such calendar year. “Consumer 36 HB1065
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Price Index” means the last Consumer Price Index for All Urban Consumers the 1
West South Central division of the South Region published by the United 2
States Department of Labor. 3
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SECTION 3. Arkansas Code § 26 -51-430(c), concerning the indexing of 5
the standard income tax deduction to inflation, is amended to read as 6
follows: 7
(c)(1) The Secretary of the Department of Finance and Administration 8
shall increase annually the standard deduction provided under subsection (b) 9
of this section by the cost -of-living adjustment for the current calendar 10
year, rounding the amount to the nearest ten dollars ($10.00). 11
(2)(A)(i) For purposes of subdivision (c)(1) of this section, 12
the cost-of-living adjustment for a calendar year is the percentage, if any, 13
by which the Consumer Price Index for the current calendar year exceeds the 14
Consumer Price Index for the preceding calendar year , not to exceed three 15
percent (3%). 16
(ii) If the Consumer Price Index for the current 17
calendar year does not exceed the Consumer Price Index for the preceding 18
calendar year, the standard deduction shall not be adjusted under this 19
subsection for that year. 20
(B) The Consumer Price Index for a calendar year is the 21
average of the Consumer Price Index as of the close of the twelve -month 22
period ending on August 31 of that calendar year. 23
(C) As used in this subsection, “Consumer Price Index” 24
means the most recent Consumer Price Index for All Urban Consumers the West 25
South Central division of the South Region published by the United States 26
Department of Labor. 27
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SECTION 4. EFFECTIVE DATE. Sections 2 and 3 of this act are effective 29
for tax years beginning on or after January 1, 2025. 30
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