Tax Relief for Low-Income Arkansans: What Are the Options?

There has been much discussion in this legislative session about how to provide tax relief for low-income families. Two proposals are currently being debated in the legislature. One is to immediately cut the grocery tax by 3% and gradually phase it out completely in future years. The second proposal is to establish a state earned income tax credit targeted to low-income families. As the analysis below shows, each proposal has advantages and disadvantages, but the EITC is clearly a more efficient way to provide tax relief to low-income families.