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Fiscal Policy & Taxes

Evaluating Tax Expenditure Legislation

Fiscal Policy & Taxes
State Revenue & Budget

This memorandum provides information intended to aid in the evaluation of legislation that would create a new or alter an existing tax expenditure. State law defines a tax expenditure as a “tax provision that provides a gross or taxable income definition, deduction, exemption, credit, or rate for certain persons, types of income, transactions, or property that results in reduced tax revenue.” Put simply, tax expenditures reduce the tax liability of qualifying taxpayers. In doing so, tax expenditures reduce the amount of revenue state and local governments collect.

The effective date for bills enacted without a safety clause is August 7, 2024, if the General Assembly adjourns sine die on May 8, 2024, unless otherwise specified. Details