§ 26-51-301 - Individuals exempt from taxation or qualifying for the low income tax credit.
26-51-301. Individuals exempt from taxation or qualifying for the low income tax credit.
(a) As used in this section:
(1) "Head of household" means the same as defined in 26 U.S.C. 2(b) of the Internal Revenue Code of 1986, as in effect on January 1, 2007; and
(2) "Qualifying widow or widower" means the "surviving spouse" as defined in 26 U.S.C. 2(a) of the Internal Revenue Code of 1986, as in effect on January 1, 2007.
(b) Beginning with tax year 2007, the following taxpayers are exempt from state individual income tax:
(1) A single individual whose gross income does not exceed ten thousand two hundred dollars ($10,200) for any income year;
(2) A married couple filing jointly with one (1) or fewer dependents whose gross income does not exceed seventeen thousand two hundred dollars ($17,200) for any income year;
(3) A married couple filing jointly with two (2) or more dependents whose gross income does not exceed twenty thousand seven hundred dollars ($20,700) for any income year; and
(4) A head of household or qualifying widow or widower with one (1) or more dependents whose gross income does not exceed fourteen thousand five hundred dollars ($14,500) for any income year.
(c) Beginning with tax year 2007, the following taxpayers are eligible for a low income tax credit:
(1) A single individual whose gross income for the taxable year is more than ten thousand two hundred dollars ($10,200) but less than thirteen thousand five hundred dollars ($13,500);
(2) A married couple filing jointly with one (1) or fewer dependents whose gross income for the taxable year is more than seventeen thousand two hundred dollars ($17,200) but less than twenty-one thousand four hundred dollars ($21,400);
(3) A married couple filing jointly with two (2) or more dependents whose gross income for the taxable year is more than twenty thousand seven hundred dollars ($20,700) but less than twenty-six thousand seven hundred dollars ($26,700); and
(4) A head of household or a qualifying widow or widower with one (1) or more dependents whose gross income for the taxable year is more than fourteen thousand five hundred dollars ($14,500) but less than nineteen thousand dollars ($19,000).
(d) For income tax year 2007, the low income tax credit in subsection (c) of this section shall be determined in accordance with the tables below, based upon the taxpayer's filing status: Click here to view image.
(e) (1) For tax years beginning on or after January 1, 2008, for purposes of determining the exemptions from income tax in subsection (b) of this section and determining eligibility for the low income tax credit in this section, the gross income amounts in subsections (b) and (c) of this section shall be adjusted annually by the cost-of-living adjustment for the current calendar year, rounded to the nearest whole dollar.
(2) For purposes of this subsection, the cost-of-living adjustment for any calendar year is the percentage, if any, not to exceed three percent (3%) by which the Consumer Price Index for the current calendar year exceeds the Consumer Price Index for the preceding calendar year.
(3) 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.
(4) 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.
(f) For tax years beginning on or after January 1, 2008, following the cost-of-living adjustment for the Consumer Price Index as provided in subsection (e) of this section, the low income tax credit in this section and the gross income limitations outlined in the tables in subsection (d) of this section shall be adjusted annually using the following method:
(1) For a single individual, the amount of the low income tax credit allowable shall be eighty percent (80%) of the income tax due upon the amount of gross income in subdivision (c)(1) of this section, indexed as provided in subsection (e) of this section, and reduced, but not below zero dollars ($0.00), by four dollars ($4.00) for each one hundred dollars ($100), or fraction thereof, that the taxpayer's gross income exceeds the indexed amount;
(2) For a married couple filing jointly with one (1) or fewer dependents, the amount of the low income tax credit allowable shall be eighty percent (80%) of the income tax due upon the amount of gross income in subdivision (c)(2) of this section, indexed as provided in subsection (e) of this section, and reduced, but not below zero dollars ($0.00), by seven dollars ($7.00) for each one hundred dollars ($100), or fraction thereof, that the taxpayer's gross income exceeds the indexed amount;
(3) For a married couple filing jointly with two (2) or more dependents, the amount of the low income tax credit allowable shall be eighty percent (80%) of the income tax due upon the amount of gross income in subdivision (c)(3) of this section, indexed as provided in subsection (e) of this section, and reduced, but not below zero dollars ($0.00), by seven dollars ($7.00) for each one hundred dollars ($100), or fraction thereof, that the taxpayer's gross income exceeds the indexed amount; or
(4) For a head of household or qualifying widow or widower with one (1) or more dependents, the amount of the low income tax credit allowable shall be eighty percent (80%) of the income tax due upon the amount of gross income in subdivision (c)(4) of this section, indexed as provided in subsection (e) of this section, reduced, but not below zero dollars ($0.00), by six dollars ($6.00) for each one hundred dollars ($100), or fraction thereof, that the taxpayer's gross income exceeds the indexed amount.
(g) For the purpose of determining eligibility for the low income tax credit in this section, income from all sources shall be used in determining the gross income of the taxpayer regardless of whether the income is taxable in Arkansas.
(h) A taxpayer is not eligible for the low income tax credit in this section if the taxpayer claims an exemption in 26-51-306 or 26-51-307, or if the taxpayer itemizes deductions.