§ 26-51-501 - Personal tax credits. - Arkansas Statutes

26-51-501. Personal tax credits.

(a) There shall be deducted from the tax after the tax shall have been computed as set forth in this act a personal tax credit as follows:

(1) (A) For a single individual, the adjusted individual credit.

(B) However, a taxpayer who was blind or deaf at any time during the income year shall be entitled to an additional tax credit of twenty dollars ($20.00).

(C) A single individual who is deaf-blind shall be entitled to an additional tax credit of forty dollars ($40.00).

(D) A single individual of sixty-five (65) years of age or older shall be entitled to an additional tax credit of twenty dollars ($20.00);

(2) (A) (i) (a) For the head of household, surviving spouse, or a married individual living with husband or wife, the adjusted joint credit.

(b) A husband and wife living together and filing either jointly or separately on the same income tax form shall receive only one (1) adjusted joint credit against their aggregate tax.

(ii) Subdivision (a)(2)(A)(i) of this section shall apply if the Director of the Department of Finance and Administration continues to provide a tax return on which a husband and wife can elect to file jointly or separately on the same return.

(B) However, in the event that the husband or wife shall be sixty-five (65) years of age or older, each of them who is sixty-five (65) years of age or older shall be entitled to an additional tax credit of twenty dollars ($20.00).

(C) However, any husband or wife filing a separate return on a separate tax form shall receive the adjusted individual credit on each return so filed, but if the husband or wife is sixty-five (65) years of age or older, each of them who is sixty-five (65) years of age or older shall be entitled to an additional tax credit of twenty dollars ($20.00).

(D) "Head of household" shall have the same meaning as defined in 2(b) of the Internal Revenue Code of 1986, as in effect on January 1, 2001.

(E) "Surviving spouse" shall have the same meaning as defined in 2(a) of the Internal Revenue Code of 1986, as in effect on January 1, 2001;

(3) (A) For each individual, other than husband or wife, who has a gross income for the tax year of less than three thousand dollars ($3,000), who has not filed a joint return with his or her spouse for the taxable year, and who is dependent upon and receives his or her chief support from the taxpayer, the adjusted individual credit.

(B) (i) As used in subdivision (a)(3)(A) of this section, "dependent" means the same as defined in 152 of the Internal Revenue Code of 1986, as in effect on January 1, 2005.

(ii) "Dependent" does not include any individual who is a citizen or subject of a foreign country unless that individual is a resident of the United States or a country contiguous to the United States.

(C) (i) As used in subdivision (a)(3)(B) of this section, "brother" and "sister" include a brother or sister by half blood.

(ii) For the purpose of determining whether any of the foregoing relationships exist, a legally adopted child of a person shall be considered a child of that person by blood;

(4) In the case of a fiduciary:

(A) If taxable under 26-51-203(a)(1), the adjusted individual credit;

(B) If taxable under 26-51-203(a)(2), the same tax credit as would be allowed the deceased if living;

(C) If taxable under 26-51-203(a)(3), the tax credit to which the beneficiary would be entitled; and

(5) In the case of a nonresident taxpayer, the taxpayer shall be entitled to that proportion of the tax credit granted by this act that the gross income within the state bears to the entire gross income wherever earned.

(b) (1) The status of the last day of the income year shall determine the right to the tax credits provided in this section.

(2) However, a taxpayer shall be entitled to tax credits for a husband or wife or a dependent who has died during the income year.

(c) (1) As used in this section, "blind person" means any person:

(A) Who is totally blind, cannot tell light from darkness;

(B) A person whose central visual acuity does not exceed 20/200 in the better eye with correcting lenses; or

(C) Whose fields of vision are so limited that the widest diameter of the visual field subtends an angle no greater than twenty degrees (20 degrees).

(2) For the purposes of subdivision (a)(1) of this section:

(A) An individual is deaf only if his or her average loss in the speech frequencies which are 500 to 2,000 Hertz in the better ear is 86 decibels, I.S.O. or worse; and

(B) An individual is deaf-blind only if he or she is both deaf and blind.

(d) For the purposes of this section:

(1) "Adjusted individual credit" shall be twenty dollars ($20.00); and

(2) "Adjusted joint credit" shall be forty dollars ($40.00).

(e) (1) (A) Not later than July 15 of each calendar year, the Director of the Department of Finance and Administration shall increase the adjusted individual credit and adjusted joint credit by the cost-of-living adjustment for that current calendar year, rounding each amount to the nearest dollar.

(B) The annual cost-of-living adjustment shall apply to the adjusted credits as contained in subdivisions (d)(1) and (2) of this section.

(2) (A) For purposes of subdivision (e)(1) of this section, the cost-of-living adjustment for any calendar year is the percentage, if any, by which the Consumer Price Index for the calendar year preceding the taxable year exceeds the Consumer Price Index for the calendar year 2001.

(B) The Consumer Price Index for any calendar year is the average of the Consumer Price Index as of the close of the twelve-month period ending on August 31 of that calendar year.

(C) As used in this subsection, "Consumer Price Index" means the last Consumer Price Index for all urban consumers published by the United States Department of Labor.

(3) The adjusted credit amounts shall apply for tax years beginning on and after January 1, 2003.

(4) The director shall not increase the adjusted credit for any calendar year unless the conditions of subsection (f) of this section are met.

(f) The adjusted credit applicable for any calendar year shall not be increased unless:

(1) The net available general revenue forecast provided to the Joint Committee on Economic and Tax Policy pursuant to 10-3-1404 in May of the calendar year for which a credit increase is contemplated indicates that net available general revenue growth for the fiscal year beginning in the calendar year for which a credit increase is contemplated will be four and two-tenths percent (4.2%) or greater; and

(2) Either:

(A) The net available general revenues for the fiscal year ending in the calendar year for which a credit increase is contemplated exceed the official forecast by at least one-half of one percent (0.5%); or

(B) The net available general revenues for the fiscal year ending in the calendar year for which a credit increase is contemplated exceed the total distributions for that fiscal year under the provisions of the Revenue Stabilization Law, 19-5-101 et seq.

(g) Section 151(c)(6) of the Internal Revenue Code of 1986, as in effect on January 1, 2003, regarding the tax treatment of kidnapped children, is adopted for the purpose of computing Arkansas income tax liability.