Our Dash of SALT Blog provides the most recent developments and changes in state and local tax regulations. Here are the latest updates for Arkansas.
July 8, 2024
Arkansas Reduces Income Taxes Rates
Authored by: Brandon Mejia and Katie Nguyen, CPA
On June 19, 2024, Arkansas Governor Sarah Huckabee Sanders signed L. 2024, S1, into law, which lowers the top individual and corporate tax rates retroactive to tax years beginning on or after January 1, 2024.
- The top individual income tax rate is reduced to 3.9% from 4.4% and,
- The top corporate income tax rate is reduced to 4.3% from 4.8%.
If you have any questions regarding income taxes, please reach out to a member of the Withum SALT Team.
September 22, 2023
Arkansas Reduces Individual and Corporate Tax Rates
Authored by: Brandon Mejia and Jonathan Weinberg, JD, LLM, Principal
On September 14, 2023, Arkansas Governor Sarah Huckabee Sanders signed legislation reducing the top tax rates for corporate and individual taxpayers.
Effective for tax years beginning after January 1, 2024, the state’s top individual income tax rate is reduced from 4.7% to 4.4%, and the top corporate income tax rate is reduced from 5.1% to 4.8%.
If you have questions about how state budget bills affect you or your business, please reach out to a member of the Withum SALT Team.
April 21, 2023
Arkansas Amends Sales and Use Tax Exemption on Machinery and Equipment
Authored by: Breea Boylan, MSA, CPA and Courtney Easterday, MS
Effective October 1, 2023, Arkansas Senate Bill 441 amends the sales tax exemption for machinery and equipment. The bill:
- Amends the definition of “used directly” when claiming an exemption for machinery and equipment;
- Specifically states that the sales tax exemption for machinery and equipment extends to the partial repair and replacement of machinery; and,
- Clarifies that machinery withdrawn from inventory for a non-exempt purpose is subject to use tax.
If you have questions about whether your business is required to pay sales tax, or self-assess use tax on purchases, please reach out to a member of the Withum SALT Team.
April 14, 2023
Arkansas Announces 2023 Sales and Use Tax Holiday for School Supplies
Authored by: Brandon Vance and Bonnie Susmano, JD, MBA
On April 1, 2023, the Arkansas Department of Finance announced a sales tax holiday for school supplies. The sales tax holiday will run from August 5 through August 6, 2023. During this time, shoppers may buy school supplies, clothing, electronics, art supplies, and instructional materials exempt from sales tax. Retailers are obligated to honor the sales tax holiday and may not charge sales tax on items that are exempt during the sales tax holiday. To view the full list of exempt items, please refer to the Department’s website.
If you have questions about Sales Tax holidays, please reach out to a member of the Withum SALT Team.
February 4, 2022
Arkansas Sales & Use Taxes – Cleaning Services
On January 21, 2022, the Arkansas Office of Hearings and Appeals ruled on the taxability of cleaning services (Dkt. No.22-131) Arkansas imposes a sales tax on cleaning services that apply under the definition of “janitorial services.” When the level of skill goes beyond this definition, Arkansas will not impose sales tax. In the instant case, the taxpayer argued that cleaning “machinery of all kinds” should be exempt. The Office of Hearings and Appeals ruled that while machinery cleaning is non-taxable, the items cleaned were not machinery. Instead, the Office of Hearings and Appeals found that the items cleaned were fixed structures used only to store and maintain products and as such, the cleaning services were deemed to be taxable.
December 9, 2021
Arkansas Announces Sales and Use Tax Rate Changes
The Arkansas Department of Finance and Administration has recently announced that certain localities will change their sales and use tax rates effective January 1, 2022. The localities increasing their rates are:
- Beebe will increase its rate from 1% to 1.25%;
- Concord will impose a new rate of 1.00%;
- Cotter will increase its rate from 1.00% to 2.00%;
- Johnson will increase its rate from 2.00% to 3.00; and,
- Pea Ridge will increase its rate from 1.00% to 2.00%;
The following counties are decreasing their rates:
- Little Rock will decrease its rate from 1.50% to 1.125%; and,
- Sebastian County will decrease its rate from 1.25% to 1.00%.
March 25, 2021
Arkansas Instituting Elective Passthrough Entity Tax
Legislation creating an elective passthrough entity tax was recently signed into law in Arkansas (L. 2021, H1209 (Act 362). Effective for tax years beginning on or after January 1, 2022, the 5.9% tax would be imposed on the net taxable income of an “affected business entity” that timely makes the requisite annual election. For specifics of the PTE tax, please reach out to the SALT team.
March 23, 2021
Arkansas Update on Extension of Filing Deadline
Arkansas Governor Asa Hutchinson has announced that, in conformance with the U.S. Treasury Department and Internal Revenue Service, the 2020 state individual income tax filing and payment deadline is extended from April 15, 2021, to May 17, 2021. The extension includes 2020 returns of Subchapter S corporations, fiduciaries and estates, partnerships, and composite returns. (Arkansas Executive Order (EO 21-06), Office of Arkansas Governor Asa Hutchinson, 03/19/2021;https://governor.arkansas.gov/images/uploads/executiveOrders/EO_21-06.pdf.)
March 24, 2020
Department of Finance and Administration to Provide Notice if Due Date will be Extended
The Arkansas Department of Finance and Administration has issued answers to a variety of frequently asked questions (FAQs) related to offices, services and tax payments in light of COVID-19. The deadline for filing and paying state income tax has not been extended. The Department is evaluating the impact of an extension on the state budget and will provide notice of whether the due date will be extended when a decision is made. The Department is still processing refund claims with no delays anticipated, and taxpayers concerned about a scheduled tax protest hearing at the Department’s offices can request that the hearing be conducted by phone.
More on Taxes and the Coronavirus Pandemic.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
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The State and Local Tax (SALT) laws vary from state to state and are constantly changing. Reach out to Withum’s SALT Team for guidance on how to navigate your state’s local tax laws.
