Revenue and Taxation

This bill reduces income tax rates for individuals, trusts, estates, and corporations in Arkansas, with changes taking effect starting in 2026. For individuals, it lowers the top tax bracket to 3.7% on income up to $94,700 and introduces a sliding scale of tax credits for those earning between $94,701 and $97,600. Corporations and foreign businesses operating in the state will see their tax rates adjusted to a tiered structure ranging from 1% to 4.1% on net income beginning in 2027. The law also includes provisions to automatically adjust these tax brackets each year based on inflation.

House Bill 1738 proposes a sales and use tax exemption for disabled veterans and authorized members of their households in Arkansas. To qualify, a disabled veteran must be certified by the U.S. Department of Veterans Affairs and submit a letter to the Department of Finance and Administration (DFA). This exemption applies to sales of tangible personal property, digital products, and services, with an annual maximum limit of $25,000 per disabled veteran. The DFA would issue exemption cards and establish rules for the program.

House Bill 1715 proposes to limit the increase in the assessed value of real property following its sale or transfer in Arkansas. For a taxpayer's homestead used as their principal residence, the first assessment after a sale would be limited to a maximum increase of 5% above the previous owner's taxable value. For all other types of real property, this limit would be 10% above the seller's taxable value. This change would directly affect new property owners by capping the initial increase in their property's assessed value for tax purposes. The bill, if enacted, would take effect for assessment years starting on or after January 1, 2026.

House Bill 1472 proposed creating new sales and use tax exemptions for specific purchases related to the agriculture and timber industries in Arkansas. The bill aimed to exempt the sales tax on parts purchased to repair agricultural equipment and machinery used directly in commercial production. It also sought to exempt sales tax on parts used to repair timber equipment and machinery involved in commercial timber production, harvesting, or processing. Furthermore, the bill included an exemption for both parts and services purchased to repair a grain bin.

House Bill 1190 aimed to create an income tax exemption for qualified teachers in Arkansas. The bill defined a "teacher" as an individual primarily engaged in K-12 student instruction at public or open-enrollment charter schools. It proposed to exempt the first $50,000 of a teacher's wages from state income tax. This change would have applied to tax years beginning on or after January 1, 2025.