Louisiana House Bill HB755

Louisiana 2015 Regular Session

• Introduced: 4/3/15
• Refer: 4/3/15
• Refer: 4/13/15

Caption

Reduces the amount of the individual income tax credit for taxes paid to other states

Impact

In terms of legislative impact, HB 755 eliminates the refundability of the credit, which means that residents will no longer be able to receive a refund if their tax credits exceed their tax liabilities in Louisiana. Additionally, the bill establishes a carryforward period for any unused tax credits, allowing taxpayers to apply them against future tax liabilities for up to five years. This shift is expected to simplify the tax process but may also result in a loss of financial relief for those who have previously benefited from the full credit.

Summary

House Bill 755 aims to amend the existing laws regarding individual income tax credits for taxes paid to other states. Currently, Louisiana residents can receive a credit for the full amount of income tax paid in other states. This bill proposes to limit that credit to the amount that would have been due to the state of Louisiana had the income been earned and taxable there. This change is significant as it directly impacts the tax obligations of individuals who earn income in multiple states, potentially leading to higher tax liabilities for some taxpayers.

Sentiment

The sentiment surrounding HB 755 appears to be mixed. Supporters argue that the bill is a necessary adjustment to ensure that tax credits are aligned more closely with actual obligations to the state. They view it as a means of protecting state revenue and preventing a potential loss of tax income. However, opponents express concern that the bill disproportionately affects residents who work across state lines, as it reduces the financial support previously available through tax credits, leading to higher overall tax payments.

Contention

Notably, the contention surrounding the bill revolves around the implications of limiting tax credits and the removal of their refundability. Critics argue that this change could discourage individuals from working out of state or compel them to reconsider their employment options if they face larger tax burdens. The transition to a nonrefundable credit system may disproportionately affect lower and middle-income taxpayers, raising equity concerns about the new structure of state tax law.