Ark. panel OKs tax exemption for military pay

LITTLE ROCK (AP) - A Senate panel has approved exempting active armed services members' pay from Arkansas' income tax, the first major tax cut headed to a vote in this year's session.

The Senate Revenue and Taxation Committee on Wednesday advanced the proposal, which officials say will cost Arkansas about $7.2 million annually. The lawmaker behind the proposal says the exemption would benefit about 6,300 people.

Lawmakers backed the proposal despite warnings from state finance officials that there's no money in Gov. Mike Beebe's proposed balanced budget for additional tax cuts.

The chairman of the Senate panel says he expects lawmakers to take up more proposed reductions now that a projected shortfall in Arkansas' Medicaid program has been reduced.

Last week, House Speaker Davy Carter called for $150 million in tax cuts this session.

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