Arkansas Offers Competitive Sales and Use Tax Exemption for Lithium Development

With its vast lithium resources in the southwestern portion of the state, Arkansas has positioned itself to be a leading upstream and midstream lithium hub for North America.  

Across the state, public and private partners have taken multiple steps to make Arkansas more competitive for lithium companies looking to do business here.  Educational institutions and private sector partners have created workforce development initiatives LiTHIUMLEARNS and LiTHIUMWORKS, in addition to supporting company incubation through the nation’s first lithium-focused accelerator, the Arkansas Lithium Technology Accelerator. Arkansas has also approved a lithium royalty rate for multiple companies, including ExxonMobil, Standard Lithium, and TETRA Technologies.  

Another critical step the state has taken is to create a sales and use tax exemption for companies investing in Arkansas’ lithium industry.  

During the 2025 General Session, the Arkansas General Assembly passed Senate Bill 568, which became Act 1012 of 2025. This bill amended the law concerning taxes on lithium extraction and development, as well as amending the rate of the severance tax on lithium. 

Most importantly, the act provides a sales and use tax exemption to encourage investment across production, processing, manufacturing, and recycling of lithium and lithium products. Companies that create qualified investments of at least $100 million, provide annual total direct and indirect compensation of at least $3 million to employees within the state over two calendar years following operation commencement, and receive a positive cost-benefit analysis from the Arkansas Economic Development Commission will be eligible to receive an exemption for any state sales or use tax paid on eligible facility costs. 

View the full bill for more information on the tax exemption.