Provides for an individual income tax exclusion for retirement income from pensions and annuities. (8/1/23) (OR -$663,000,000 GF RV See Note)
Impact
The proposed legislation is expected to have significant fiscal implications for state revenue, with an estimated reduction in general funds amounting to approximately $663 million, according to the fiscal note accompanying the bill. This measure aims to provide financial relief to senior citizens, promoting economic stability for individuals who rely on fixed retirement incomes. By eliminating the tax burden on such income, the bill intends to enhance the quality of life for older residents, potentially influencing their spending and saving behaviors in the state.
Summary
Senate Bill 114, introduced by Senator Stine, seeks to amend the existing Louisiana tax code by providing a full exemption from individual income tax for all retirement income received by individuals aged 65 and older. Previously, the law exempted only $6,000 of annual retirement income; however, under SB114, this limitation will be removed, allowing seniors to retain their full pension and annuity income without incurring state income tax. The bill is set to apply to taxable periods beginning on or after January 1, 2026, with an effective date of August 1, 2023.
Sentiment
The general sentiment surrounding SB114 appears to be positive among proponent groups advocating for elderly financial welfare and economic support. Supporters argue that the bill addresses the high cost of living faced by seniors, allowing them to allocate more funds towards healthcare, living expenses, and other necessary costs. However, there may also be concerns regarding the long-term impact on state revenue and the potential challenges in funding essential services that may be affected by reduced tax collections. Critics, particularly those focused on state budgeting and fiscal priorities, may question the feasibility of sustaining such a significant exemption without adverse consequences.
Contention
Notable points of contention regarding SB114 include the debate over the prioritization of tax exemptions for a specific demographic group, which could lead to challenges in equity and fairness within the overall state tax system. Some legislators may voice concerns that while the exemption is beneficial to seniors, it could necessitate cuts to other services or increased taxes on different populations to balance the budget. The discussion may highlight the broader implications of prioritizing tax relief for retirees over funding educational or infrastructural projects, raising questions about the overall fiscal strategy and responsibilities of the state.
Provides for an individual income tax exemption for all annual retirement income of individuals sixty-five years of age or older. (8/1/23) (OR -$663,000,000 GF RV See Note)
Repeals individual income, corporate income, and corporate franchise taxes and repeals all credits, deductions, exemptions, and exclusions from the taxes (OR DECREASE GF RV See Note)
Provides for a flat rate for purposes of calculating income tax for individuals, estates, and trusts, increases the standard deduction, and modifies or repeals certain income tax deductions and credits (Item #5 and 6) (RE1 DECREASE GF RV See Note)
Relating to income taxes, to provide that up to $6,000 of taxable retirement income is exempt from state income tax for individuals 65 years of age or older, Sec. 40-18-19 am'd.