Increases the amount of the earned income tax credit (OR -$64,600,000 GF RV See Note)
The amendment to the EITC signals a significant shift in state tax policy, aiming to provide greater support for low-income earners. By doubling the state's percentage of the federal earned income tax credit, the bill is expected to increase the number of taxpayers who benefit from tax relief, potentially impacting their disposable income significantly. The provision for refunds if the credit exceeds tax liability ensures that even those with no tax obligation benefit from the credit, addressing ongoing concerns about income inequality.
House Bill 133 proposes to enhance the state's earned income tax credit (EITC) from 5% to 10% of the eligible federal earned income tax credit amount for tax years beginning on or after January 1, 2026, and continuing through 2030. This increase aims to provide more substantial financial relief for low-income individuals and families, thereby helping to alleviate poverty and promote economic stability for those most in need. The bill reflects a growing recognition of the role that tax credits can play in supporting working families, especially in a post-pandemic economy.
Overall, the sentiment surrounding HB 133 appears to be positive among proponents who argue that it reinforces the state's commitment to supporting its residents through economic challenges. Advocates view the increase as a vital step in providing necessary financial support to the working class. However, there may also be critiques regarding the fiscal impact on the state budget, as such credits could reduce state revenue. Nonetheless, this bill aligns with broader national trends favoring tax credits as tools for social welfare.
While proponents of HB 133 advocate for its potential benefits, discussions may arise surrounding questions of budgetary constraints and the implications of increased tax credits on state fiscal responsibility. Opponents might raise concerns about the sustainability of funding these credits in the long term and whether it might detract from funding other vital services. Additionally, the bill’s scheduled implementation date of January 1, 2026, allows for further debates on the state’s economic priorities leading up to its enactment.