Reduces the amount of the individual income tax deduction for excess federal itemized personal deductions for certain tax years (OR +$77,000,000 GF RV See Note)
The amendment to the individual income tax structure is expected to have a significant impact on taxpayers who rely on itemized deductions. By lowering the deductible amount from 100% to 75% for the specified tax years, it effectively increases the taxable income of individuals who claim these deductions. The reduction aims to influence state revenue positively while still maintaining some level of tax relief going forward, which may affect individuals' financial situations during the impacted years.
House Bill 90 proposes an amendment to the Louisiana individual income tax law, specifically targeting the deduction for excess federal itemized personal deductions. This bill aims to reduce the allowable deduction for certain tax years, specifically from 100% to 75% for excess federal itemized personal deductions during the tax years 2015, 2016, and 2017. The intention behind this adjustment is to generate additional revenue for the state while ultimately reinstating the deduction to its full amount of 100% for tax years beginning on January 1, 2018, thereby providing planned tax relief in future years.
The sentiment surrounding HB 90 appears to be mixed among lawmakers and stakeholders involved. Supporters argue that while the reduction might pose a temporary burden on taxpayers, it is a necessary move to stabilize state finances. Detractors, however, express concern that this change would disproportionately affect lower- to middle-income taxpayers who rely heavily on itemized deductions to lower their tax bills, which could lead to increased financial strain during the years affected by the tax deduction reduction.
A notable point of contention in discussions regarding HB 90 revolves around the balance between state revenue needs and tax equity. Some legislators advocate that temporarily reducing the deduction is essential for funding state services, while opponents worry it undermines the tax relief benefits individuals have come to expect during challenging economic times. As the bill progresses through the legislative process, continued debates are likely to highlight the tension between these competing interests regarding fiscal responsibility and taxpayer relief.