Machinery and equipment used directly in manufacturing that are purchased for a new manufacturing facility or to replace existing machinery and equipment are exempt. Machinery and equipment required by Arkansas law to be purchased for air or water pollution control or for removal of sulfur pollutants from refined petroleum are also exempt.
Arkansas offers tax incentives for businesses that provide childcare for their employees.
A business may choose between two state income tax credit options:
Arkansas allows taxpayers to receive an income tax credit for the purchase of equipment used exclusively for reduction, reuse or recycling of solid waste material for commercial purposes, whether or not for profit, and the cost of installation of such equipment by outside contractors.
Expenditures eligible for tax credit certification:
Act 1404 of 2013, as codified in §§ 26-52-447, 26-53-149 and 15-4-3501, establishes two options by which certain state sales and use taxes relating to the partial replacement and repair of machinery and equipment used directly in manufacturing may be refunded to eligible taxpayers beginning July 1, 2014.
The first option, which provides for a refund of one percentage point (1%) of the 5.875% sales and taxes levied under §§ 26-52-301, 26-52-302, 26-53-106 and 26-53 107, may be claimed by a taxpayer for the purchase and installation of certain machinery and equipment used directly in manufacturing and processing. To qualify for this refund, a taxpayer must hold a direct pay sales and use tax permit from the Arkansas Department of Finance and Administration (DFA).
The second option, which provides for an increased refund of all sales and use taxes (5.875%) levied under §§ 26-52-301, 26-52-302, 26-53-106 and 26-53-107, is a discretionary incentive that may be offered by the Director of the Arkansas Economic Development Commission (AEDC) to a taxpayer who undertakes a major maintenance and improvement project to purchase and install certain machinery and equipment used directly in manufacturing and processing.
To qualify for this discretionary refund, a taxpayer must:
Arkansas provides a 30% state income tax credit to eligible companies for reimbursements they make on behalf of employees for approved educational expenses. The employees must successfully complete the course at an accredited Arkansas post-secondary educational institution. The credit authorized by this program cannot offset more than 25% of the company’s state income tax liability in any tax year.
(A.C.A. § 26-51-2201 et seq.) as amended by Act 567 of 2015. The Arkansas Historic Rehabilitation Income Tax Credit Program, administered by the Arkansas Historic Preservation Program, an agency of the Department of Arkansas Heritage, offers a 25% state income tax credit for certified rehabilitation of eligible income and non-income producing properties. The program has an annual aggregate cap of $4 million in credits; per project caps of $125,000 in credits for properties and $25,000 in credits for non-income producing properties.
The program is limited to one project per building in a 24-month period.
Credits are and may be carried forward for up to five years.
The program is scheduled to sunset on December 31, 2027.
For additional information and application information, including program rules, please reference the Rehabilitation Tax Credits information at ArkansasPreservation.com