House passes tax cut package, setting stage for Senate talks

a lot of money - a million US dollars in cash

The House has approved a bill with a set of sales tax holidays for consumers and a major cut for businesses, teeing up talks with the Senate over tax breaks for the next year.

The bill (HB 7073) is projected to save businesses and consumers $870 million over three years. It passed on an 88-17 vote, with nearly half of Democrats voting against it.

Four sales tax holidays lawmakers have approved in recent years are part of the package again, but they have been reduced compared to the current fiscal year.

The traditional back-to-school sales tax holiday on school items, clothes and laptops $1,500 or less would last two weeks starting July 29, but a second two-week holiday for the Spring semester that lawmakers approved for the current year isn’t included.

There’s also a sales tax break on a variety of events and outdoor items dubbed the “Freedom Summer” last year, which has been reduced to a “Freedom Month.” The break applies to tickets to sports events, movies, state parks, museums, ballets, plays, concerts, fairs, festivals and gym memberships, as well as a variety of outdoor recreation items.

The “tool time” sales tax holiday would also return under the measure and would last one week starting Sept. 1. The sales tax break would apply to hand tools $50 or less, power tools $300 or less, work gloves $25 or less, safety glasses $50 or less, work boots $175 or less, tool belts $100 or less and more.

House leaders amended the bill earlier in the Regular Session to include a $184 million cut to insurance premium taxes, which insurance companies would only be eligible for if they give discounts to homeowners on their premiums.

The biggest cut lowers the business rent tax to 1.25% starting July 1 for one year. The rate is currently 4.5%, but is slated to drop to 2% in August. The reduction is tied to the state’s unemployment trust fund, which needed to be replenished after it was reduced during the COVID-19 pandemic, but is projected to be refurbished at a faster rate than economists projected.

Businesses would save $339.6 million under the provision, but that isn’t part of the Senate’s tax cut plan (SB 7074). Lawmakers will resolve any differences in the final week of the Regular Session, which is slated to end March 8.