Income tax; provide a credit for taxpayers who claim a federal earned income tax credit.
If enacted, the bill would affect the state tax code by codifying the new credit into Chapter 7, Title 27 of the Mississippi Code of 1972. The credit is designed to operate in a manner that allows taxpayers to claim a refund from the Department of Revenue should their eligible credit surpass their tax obligations for the year, ensuring that low-income taxpayers receive some financial relief. By potentially increasing the refund available to those who qualify for the federal tax credit, the bill aims to promote financial stability among lower-income households in Mississippi.
House Bill 97 proposes the establishment of a state income tax credit for taxpayers who are eligible to claim the federal earned income tax credit as outlined in 26 USCS Section 32. Specifically, the bill seeks to provide a refundable credit equal to five percent (5%) of the federal credit amount that a taxpayer claims on their federal income tax return. This initiative is aimed at easing the tax burden on lower-income families who utilize the federal credit, making it financially beneficial for them at the state level as well.
Notable points of contention surrounding HB 97 may include debates on the financial implications for the state’s budget, as the cost of these credits could significantly impact tax revenue. Proponents may argue that assisting low-income families through tax credits can stimulate economic activity and provide necessary support during challenging financial times. Conversely, opponents may raise concerns about the sustainability of such credits and the overall fiscal responsibility of providing refundable credits, especially in a potentially tight state budget environment.