Income tax; provide a credit for taxpayers who claim a federal earned income tax credit.
Impact
If enacted, HB1106 will have a direct financial impact on low to moderate-income households across Mississippi, as it enables additional support for those claiming the federal EITC. This credit is expected to enhance the financial capacity of these families, thereby promoting economic stability. The legislation aims to further incentivize work among low-income individuals by enhancing the existing federal EITC benefits at the state level, which may lead to increased consumer spending and potentially stimulate local economies.
Summary
House Bill 1106 is a proposed legislation aimed at providing a state income tax credit to eligible taxpayers who claim the federal earned income tax credit (EITC). The bill stipulates that taxpayers will be granted a refundable credit amounting to ten percent (10%) of the federal EITC they claim on their federal income tax returns. This means that should the credit exceed the taxpayer's imposed state income tax for that tax year, they will be eligible for a refund from the Department of Revenue for the excess amount.
Contention
There may be contention surrounding HB1106 regarding its implications for state revenue and the equitable distribution of tax benefits. Proponents argue that the bill offers essential financial relief for vulnerable taxpayers, promoting fairness within the tax system. However, critics may express concerns over the potential budgetary impact, questioning whether the state can afford the projected loss in tax revenue due to the added credits, particularly in an environment with pre-existing fiscal constraints.