- Advantage Arkansas Income Credit
- Affordable Housing
- Apprenticeship Program
- Arkansas Central Business Improvement District Rehabilitation and Development Investment Tax Credit Act (Not Currently Effective)
- Arkansas Wood Energy Products and Forest Maintenance
- ArkPlus Income Tax Credit
- Biodiesel Incentive Act
- Biotechnology
- Capital Development Company Income Tax Credit
- Child Care Facility
- Coal Mining Income Tax Credit
- Create Rebate Program
- Delta Geotourism Incentive
- Economic Development Act
- Enterprise Zone Program
- Equipment Donation or Sale Below Cost
- Equity Investment Incentive
- Existing Workforce Training
- Family Savings Initiative Act
- Historic Rehabilitation Income Tax Credit
- In-House Research in Area of Strategic Value Income Tax Credit
- In-House Research by Targeted Business Income Tax Credit
- In-House Research Income Tax Credit
- InvestArk Program
- Low Income Housing Credit
- Motion Picture Incentives
- Nonprofit Incentive Act
- Philanthropic Investment in Arkansas Kids Program
- Public Roads Improvement Credit
- Railroad Modernization Act
- Research Park Authority
- Research and Development with Universities Tax Credit
- Rice Straw
- Qualified Research
- Targeted Business Tax Back Sales and Use Tax Refund
- Targeted Business Payroll Income Tax Credit
- Tax Back Sales and Use Tax Refund
- Tourism Project Development Tax Credits
- Tuition Reimbursement Tax Credit
- Venture Capital Investment
- Waste Reduction and Recycling Equipment Credit
Advantage Arkansas Income Tax Credit (ACA §15-4-2705)
The Consolidated Incentive Act 182 of 2003, as amended, provides an income tax credit to an eligible company for creating new jobs after the company has signed a financial incentive agreement with the Arkansas Economic Development Commission. The annual payroll of the new employees must meet the payroll threshold for the county tier in which the business is located. The income tax credit earned is a percentage of the annual payroll of the new full-time permanent employees and is earned each tax year for a period of five (5) years. Unused credits may be carried forward for nine (9) years beyond the year in which the credit was first earned. The Advantage Arkansas job creation credit cannot offset more than 50% of a business’s income tax liability in any one tax year.
To claim the credit, attach a copy of the Certificate of Tax Credit issued by Tax Credits/Special Refunds Section to the tax return.
For information regarding application into the Advantage Arkansas Program, contact Arkansas Economic Development Commission at (501) 682-1121 or visit their website at http://arkansasedc.com/
Affordable Housing (ACA §15-5-1301 et seq.)
Provides for an income tax credit for any business firm engaged in providing affordable housing which is approved through the Arkansas Development Finance Authority. The tax credit is limited to 30% of the total amount invested in affordable housing assistance activities. The credit may not exceed the income tax otherwise due. Any unused credit may be carried forward for the next 5 succeeding tax years or until exhausted, whichever occurs first.
For information regarding application into the Affordable Neighborhood Housing credit, contact
Arkansas Development Finance Authority at 501-682-5900 or visit their website at www.arkansas.gov/adfa/
Apprenticeship Program (ACA §26-51-509) as amended [Applicable to tax years 2018 and thereafter]
Act 1042 of 2017 provides for an income tax credit for each qualified youth apprentice who is at least 16 years of age and is employed to learn an apprenticeable occupation or is in an apprenticeship or work-based learning program. To claim the benefits, a taxpayer must obtain a certification from the Office of Apprenticeship of the U.S. Department of Labor or the Department of Career Education, certifying to the Department of Finance and Administration that the taxpayer has met all the requirements and qualifications.
A taxpayer who employs an apprentice is allowed an income tax credit in the amount of $2,000 or 10% of the wages earned by the youth apprentice, whichever is less, for each apprentice. The amount of the income tax credit claimed in a taxable year may not exceed the individual or corporate income tax otherwise due. Any unused credit may be carried forward for a maximum of two (2) consecutive taxable years.
To obtain certification, contact U.S. Department of Labor at (501) 324-5415 or Department of Career Education at (501) 682-1360. After certification has been obtained, contact Department of Finance and Administration Tax Credits/Special Refunds Section at (501) 682-7106 or [email protected] for the appropriate forms.
Arkansas Central Business Improvement District Rehabilitation and Development Investment Tax Credit Act (ACA §26-51-2401 et seq.)
(Not Currently Effective) Act 1166 of 2011 provides for an investment tax credit against the tax imposed by the Income Tax Act of 1929, § 26-51-101 et seq., for any taxpayer incurring costs and expenses that are qualified rehabilitation or development expenditures of eligible central business improvement district property.
The investment tax credit is equal to twenty-five percent (25%) of qualified rehabilitation or development expenditures incurred for a qualified project up to the first: (1) Five hundred thousand dollars ($500,000) on income-producing property; or (2) Two hundred thousand dollars ($200,000) on non-income-producing property.
The investment tax credit for a qualified project covering income-producing eligible central business improvement district property shall be taken in the tax year in which the eligible central business improvement district property is placed in service. The investment tax credit for a qualified project covering residential eligible central business improvement district property or other non-income-producing eligible central business improvement district property shall be taken in the tax year the qualified project is completed.
The amount of the investment tax credit that may be used by a taxpayer for a taxable year shall not exceed the amount of income tax due from the taxpayer. Any unused investment tax credit may be carried over for five (5) consecutive taxable years for credit against the state income tax due from the taxpayer. The investment tax credit may be transferred, sold, or assigned only one (1) time. A taxpayer who transfers, sells, or assigns the investment tax credit shall notify in writing the Department of Finance and Administration within thirty (30) days of the following information: The name, address, and taxpayer identification number of the transferee, purchaser, or assignee of the investment tax credit; The original issuance date of the investment tax credit and the date of the transfer, purchase, or assignment of the investment tax credit; and The amount paid for the investment tax credit by the transferee, purchaser, or assignee.
If the Chief Fiscal Officer of the State certifies that sufficient funding is available in the General Improvement Fund, this subchapter is effective for tax years beginning on and after January 1 of the year following the certification and continues for a period of two (2) years. The Chief Fiscal Officer of the State has not certified that funding is available; therefore this credit is currently not available for use.
Arkansas Wood Energy Products and Forest Maintenance (ACA §26-51-2704)
Act 594 of 2021 provides an income tax credit equal to 30% of the purchase price of qualifying equipment with a required investment of $50,000,000 for the project. Up to $5,000,000 of the credits may be redeemed each year. The credits will carry forward in perpetuity until used. The credits may be sold by the owner. If the credits are sold or transferred for value to a third party, the purchaser’s credits shall not expire before the third taxable year following the year in which the credits were sold. A qualifying project must certify that it’s closing date for all facilities will be by December 31, 2023.
To qualify for this credit, the taxpayer must apply with the Arkansas Economic Development Commission (AEDC), demonstrate the minimum $50,000,000 investment, and sign an economic incentive agreement. The taxpayer will also be required to create at least 100 new full-time permanent jobs with an average salary of $60,000 per year. The project must show a positive economic benefit based on an evaluation by AEDC and the DFA Office of Economic Analysis and Tax Research. The economic incentive agreement will include performance criteria and claw back provisions to evaluate the capital investment, employment criteria, and cost-benefit analysis.
For information regarding application into the Arkansas Wood Energy Products and Forest Maintenance, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/.
^ back to top
ArkPlus Income Tax Credit (ACA §15-4-2706(b))
The Consolidated Incentive Act 182 of 2003, as amended, allows the Arkansas Economic Development Commission (AEDC) to provide a ten percent (10%) income tax credit to eligible businesses based on the total investment in a new location or expansion project. The ArkPlus Program requires a minimum investment and a minimum payroll based on the payroll of new full-time permanent employees hired after the date of a financial incentive agreement signed by AEDC. The minimum investment and payroll requirements are dependent upon the tier in which the business is located. Any unused credits may be carried forward for nine (9) years beyond the year in which the credit was first earned. The ArkPlus tax credits taken during any tax year shall not exceed fifty percent (50%) of the business’s income tax liability resulting from the project or facility.
Effective July 30, 2007, the ArkPlus incentive may also be awarded by AEDC as an optional income tax credit or sales tax credit to technology-based businesses that create a new payroll of at least $250,000 and pays wages at least 175% of the state or county average hourly wage, whichever is less. The percentage of credit earned shall be based on the level of investment, ranging from 2% to 8% of the investment costs. Depending on the average hourly wage paid by the company, the credits earned may be used to offset 50%, 75%, or 100% of the tax liability. Any unused credits may be carried forward for nine (9) years beyond the year in which the credit was first earned.
To claim the credits authorized under this program, attach to the tax return a copy of the Certificate of Tax Credit issued by Tax Credits/Special Refunds Section.
For information regarding application into the ArkPlus Program, contact Arkansas Economic Development Commission at (501) 682-1121 or visit their website at http://arkansasedc.com/
Biodiesel Incentive Act §15-4-2801 through 15-4-2805
The Biodiesel Incentive Act provided an income tax credit to biodiesel suppliers equal to 5% of the cost of facilities and equipment used directly in the wholesale or retail distribution of biodiesel fuels. A taxpayer may claim the credit by attaching a written certification to the Income Tax return detailing qualifying costs of facilities and equipment. This credit may be claimed by qualifying biodiesel suppliers that file the certification.
NOTE: A refund to biodiesel suppliers equal to 50¢ for each gallon of biodiesel fuel used to produce a biodiesel mixture for sale by the supplier or for use by the supplier. [Refunds no longer available -Expired June 30, 2007]; and a grant to biodiesel producers qualified by the Alternative Fuels Commission not to exceed 10¢ per gallon of biodiesel fuel produced. [Grants no longer available-Commission repealed by Act 873 of 2007]
Biotechnology
Certain Tax Credits Repealed/Amended (Act 716 of 2009) Repealed the Biotechnology and Advanced Fuels Act of 1999 and Arkansas Emerging Technology Development Act of 1999. Amended the Consolidated Incentive Act of 2003.
Act 1117 of 1997 provides income tax credits for the development of biotechnology in Arkansas. Biotechnology means the uses of biochemistry, molecular biology, genetics, and bioengineering to meet the needs of agricultural, aquaculture, forestry and environmental industries, as well as developing products useful for modern medicine, veterinary science, and pharmaceuticals.
The credits available are equal to: five percent (5%) of the cost for construction, expansion, improvement, renovation, or purchase of a biotechnology facility; thirty percent (30%) of the cost for training employees in biotechnology and Higher Education Partnerships; twenty percent (20%) of the amount the cost of qualified research, exceeds the cost of such research in the base year.
The credits allowed shall be used to offset the first fifty thousand dollars ($50,000) of income tax liability arising during the credit year, and fifty percent (50%) of any remaining income tax liability. Any unused credit may be carried forward for a maximum of nine (9) taxable years after the credit year in which the credit originated.
To claim the benefits of this program, a taxpayer must obtain certification from the Director of the Arkansas Economic Development Commission certifying to the Revenue Division of the Department of Finance and Administration that the taxpayer is engaged in qualified research in biotechnology. The last day to sign a financial incentive agreement for this program was March 2, 2003. Please see one the research and development credits above.
Capital Development Company Income Tax Credit (ACA §15-4-1001 et seq.) – Repealed by Act 426 of 2017
No capital development company shall enter into an agreement or commitment for the purchase of equity interest in the company on or after July 31, 2007.
Act 860 of 2003, as amended, allows the original purchaser of an equity interest in a Capital Development Company an income tax credit equal to 33⅓% of the actual purchase price, limited to 50% of the net income tax liability in any one year. Any unused credit may be carried forward not to exceed eight (8) tax years. No credit will be allowed for any tax year ending after December 31, 2021.
An original purchaser of equity interests who seeks to qualify for the income tax credit or premium tax credit provided in this section must obtain and attach to the income tax return for the years the credit is claimed a certified statement from the company stating:
(A) The name and address of the original purchaser;
(B) The tax identification number of the person entitled to the credit;
(C) The original date of purchase of the equity interest;
(D) The number and type of equity interests purchased;
(E) The amount paid by the original purchaser for the equity interest;
(F) The amount of the tax credit associated with the purchase of the equity interest; and
(G) The amount of dividends and distributions previously paid by the company to the purchaser.
A transferee from an original purchaser is entitled to the tax credit described in this section only to the extent the credit is still available to and has not previously been used by the transferor. See Ark. Code. Ann. § 15-4-1026 for details.
To claim the credits authorized by this program, attach to the tax return a certification statement from the capital development company.
Child Care Facility – Employer Provided Early Childhood Program (ACA §26-51-508)
Act 987 of 1993, as amended by Act 850 of 1995, allows an income tax credit of 3.9% of the annual salary of personnel employed exclusively for providing child care services to the business’s employees, or a $5,000 income tax credit for the first tax year the business provides its employees with a child care facility. The credit is first available for use in the taxable year following the year the business makes payment of wages to childcare workers. Any unused credit may be carried forward two (2) years. To be eligible, the company must obtain a certification from the Arkansas Department of Education qualifying the facility as having an appropriate early childhood program.
To claim the credit authorized by this program, attach to the tax return a copy of the certificate of approval issued by the Department of Education.
Coal Mining Income Tax Credit (ACA §26-51-511)
An income tax credit of $2.00 per ton of coal mined, produced, or extracted on each ton of coal mined in Arkansas in a tax year. An additional credit of $3.00 per ton will be allowed for each ton of coal mined in Arkansas in excess of 50,000 tons in a tax year. The credit can only be earned if the coal is sold to an electric generation plant for less than $40.00 per ton excluding freight charges. The credit expires five (5) tax years following the tax year in which the credit was earned.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by Tax Credits/Special Refunds Section.
For information regarding approval for the Coal Mining Tax Credit, contact the Tax Credits/Special Refunds Section at (501) 682-7106.
Create Rebate Program (ACA §15-4-2707)
The Create Rebate program provides qualified businesses a financial incentive equal to 3.9 to 5 percent of the annual payroll of new full-time permanent employees. The program requires a minimum payroll of $2,000,000 within 24 months for the new full-time permanent employees hired after the date of the financial incentive agreement. The payroll rebate benefit can only be authorized at the discretion of the Director of the Arkansas Economic Development Commission and may be offered for up to ten (10) years.
The Create Rebate incentive may also be awarded by AEDC to technology-based enterprises that have a minimum annual payroll of $250,000 and pays wages at least 175% of the state or county average hourly wage, whichever is less. The payment amount will equal 5% of the company’s annual payroll for the new full-time permanent employees.
ACA § 15-4-2707 as amended by Act 327 of 2019 states, to receive incentives under this program, a qualified business shall meet minimum annual payroll thresholds for new full-time permanent employees for the county tier in which the project is located.
The qualifying business must apply to the Arkansas Economic Development Commission. For information regarding application into the Create Rebate Program, contact Arkansas Economic Development Commission at (501) 682-1121 or visit their website at http://arkansasedc.com/.
Delta Geotourism Incentive Act 518 of 2007
Act 518 of 2007, as amended by Acts 349 and 1192 of 2009 and Act 738 of 2011, provides an income tax credit to geotourism-supporting businesses approved by the Arkansas Department of Parks and Tourism that invests a minimum of $25,000. The credit is equal to 25% of the qualified investment; however, the maximum amount of investment considered for the credit each year is $250,000. Any unused credit may be carried forward for 5 years after the tax year the credit was earned, or until exhausted, whichever event occurs first. Geotourism tax credits may be sold, transferred or assigned to recipients both within the Lower Mississippi River Delta and outside of that area.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by DFA Revenue Tax Credits/Special Refunds Section.
For information regarding approval for the Delta Geotourism Incentive, contact the Tax Credits/Special Refunds Section at (501) 682-7106.
Economic Development Act of 1995 (ACA §15-4-1901 et seq.)
There are no new projects approved under this code section after March 2, 2003.
Act 831 of 1995, as amended by Act 807 of 1997 and 575 of 1999, authorizes the Arkansas Economic Development Commission to negotiate proposals on behalf of the State with prospective businesses which are considering locating a new facility, or expanding an existing facility, that would employ at least 100 new permanent employees and expend at least $5,000,000 on the project.
An income tax credit may be granted based upon the business’ annual amount of debt service (principal and interest) paid to a lender in connection with the project financing. The amount of credit that may be claimed each year will depend on the average hourly wage of the new permanent employees and may not exceed the Arkansas income tax liability resulting from the project facility. For projects initiated after June 1, 2000, the Revenue Division of the Department of Finance & Administration shall authorize an income tax credit based on the total investment in land, buildings and equipment divided by the term of the financial incentive plan for each tax year. The amount of income tax credit taken during any tax year shall not exceed the Arkansas income tax liability resulting from the project plant or facility. The income tax liability of the project plant or facility shall be determined by adding the sales factor, payroll factor and property factor of the plant or facility and dividing the sum by three (3) to arrive at the project apportionment percentage. The total Arkansas corporate income tax liability of the corporation shall be multiplied by the project apportionment percentage to arrive at the income tax liability arising from the project. The income tax credit available may then be used to offset the income tax liability arising from the project as agreed for in the financial incentive agreement. The carry forward for this credit is 9 years.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by Tax Credits/Special Refunds Section.
Enterprise Zone Program (Act 947 of 1993) (ACA §15-4-1701 et seq.)
Note: There are no new projects approved under this code section after March 2, 2003.
Act 947 of 1993, as amended, authorizes sales & use tax refunds and income tax credits to businesses located in Arkansas that embark on certified projects involving the construction of a new plant or facility; the expansion of an established plant or facility; or the replacement of production or processing equipment or support infrastructure. To obtain the benefits of this Act, the business does not have to be located within a designated Enterprise Zone and may be located anywhere within the State of Arkansas.
To qualify, the business must be classified as one of the following:
- Manufacturers in SIC codes 20-39 and businesses primarily engaged in commercial, physical or biological research as classified by SIC code 8731 that create one or more net new full-time permanent jobs; or
- Eligible computer firms with no retail public sales that derive at least 75% of their revenue from out-of-state sales and create five or more net new full-time permanent jobs; or
- Businesses primarily engaged in motion picture production with no retail public sales that derive at least 60% of their revenue from out-of-state sales and create twenty-five (25) or more net new full-time permanent jobs; or
- Distribution centers, including e-commerce distributors, that derive at least 75% of their resources from out-of-state sales; office sector businesses; corporate or regional headquarters; or trucking/distribution terminals with no retail public sales that create twenty-five (25) or more net new full-time permanent jobs; or
- Operations that extract coal or lignite from within the boundaries of the State of Arkansas and hire at least twenty-five (25) employees.
For companies certified prior to April 6, 1999 the income tax credit is equal to 100 times the average hourly wage paid per net new permanent employee. This credit is doubled, with a maximum of $2,000.00, if the business is located in a county that had an unemployment rate greater than 10% or greater than 3% of the state’s average unemployment rate for the preceding calendar year. A new permanent employee is a position or job which was created as a result of the project and which is filled by one or more employees or contractual employees. The position must have had someone working in it for at least twenty-six (26) consecutive weeks with an average of at least thirty (30) hours per week.
For companies certified on or after April 6, 1999, the maximum credit is $3,000 per net new full-time permanent employee hired within 60 months following the date of the approved financial incentive plan. The credit allowed can be increased by a factor of four (4) with a maximum credit of $6,000 if the business is located in a county that has an unemployment rate equal to or in excess of 150% of the state’s average unemployment rate for the preceding calendar year.
The tax credit shall be used for the taxable year in which the net new permanent employees were hired. For projects approved prior to March 25, 1997, if the entire credit cannot be used in the year earned, the remainder may be applied against the income tax for the succeeding four (4) years or until the credit is entirely used, whichever occurs first. For companies certified on or after March 25, 1997, any remaining credit may be applied against the income tax for the succeeding 9 years.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by Tax Credits/Special Refunds Section.
Equipment Donation or Sale Below Cost or Qualified Research Credit (ACA §26-51-1101 et seq.)
ACA § 26-51-1102, as amended by Act 203 of 2019 there is granted a credit against a taxpayer’s Arkansas corporate income tax or Arkansas individual income tax for the following types of donations or sales, or both, of new machinery and equipment to a qualified educational institution in connection with a qualified education program or qualified research program such as: donations of new machinery and equipment; sales below cost of machinery and equipment; and cash donations for the purchase of new machinery and equipment by a qualified educational institution.
ACA § 26-51-1103, as amended by Act 1607 of 2007, allows up to one-hundred percent (100%) offset of income tax liability after all other credits and reductions in tax have been calculated. The credit shall be claimed in the year of the qualified research expenditure, donation, or sale. However, all or part of any unused credit may be carried over to and claimed in succeeding tax years until the credits are exhausted or until the end of the nine (9) tax years succeeding the tax year of the qualified research expenditure, donation, or sale, whichever occurs earlier.
Effective July 31, 2007 Act 1607 of 2007 granted a credit against a taxpayer’s Arkansas corporate income tax or Arkansas individual income tax equal to thirty-three-percent (33%) of a donation made to an accredited institution of higher education to support a research park authority.
ACA § 26-51-1104 as amended by Act 2013 of 2019 Documentation required.
To claim the credit granted by ACA § 26-51-1102, the taxpayer shall provide the following for each piece of machinery and equipment donated, sold below cost, or purchased by a qualified educational institution with a cash donation:
An affidavit from the receiving qualified educational institution that the qualified educational institution has received the machinery and equipment; the machinery and equipment is new machinery and equipment within the meaning of this subchapter; the qualified educational institution received the machinery and equipment as a donation or, if the qualified educational institution purchased the machinery and equipment, a statement of the amount paid for the machinery and equipment; and the machinery and equipment has been donated, purchased by the qualified educational institution with a cash donation provided by a taxpayer, or sold to the qualified educational institution for use in a qualified education program or a qualified research program; and in the case of a donation or sale by a retail or wholesale business, a copy of the invoice from the business’ supplier showing the actual cost of the machinery and equipment. In the case of a donation or sale below cost by a manufacturer, a copy of the manufacturer’s wholesale price list showing the lowest price of the machinery and equipment for which credit is claimed. In the case of a purchase by a qualified educational institution with a cash donation, itemized receipts documenting the amount of the cash donation and the purchase costs of the new machinery and equipment.
To claim the credit granted by ACA § 26-51-1102, the taxpayer shall show that the Executive Director of Arkansas Economic Development Commission and the Director of the Department of Higher Education have approved the qualified research expenditure as a part of a Qualified Research Program.
Copies of each of the above documents shall be filed by the taxpayer with the Arkansas Economic Development Commission and with his or her return as an attachment to the form prescribed by the Director of the Department of Finance and Administration.
To claim the credits authorized, attach to the tax return the documentation required in ACA §26-51-1104.
For additional information, contact Arkansas Economic Development Commission at (501) 682-1121 or visit their website at http://arkansasedc.com/ or Department of Higher Education at (501) 371-2000 or visit their website at www.adhe.edu.
Equity Investment Tax Credit (ACA §15-4-3301)
Act 566 of 2007 provides an income tax credit to persons or companies investing in certain types of eligible businesses. Award of this credit shall be at the discretion of the Director of the Arkansas Economic Development Commission. The credit is equal to 33 1/3 % of the actual purchase price paid for the equity interest to the business. The credit is limited to 50% of the state income tax or premium tax liability of the taxpayer after all other credits and reductions in tax have been calculated. Any unused credits may be carried forward nine (9) years.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by the Arkansas Economic Development Commission.
For information regarding application into the Equity Investment Tax Credit Program, contact Arkansas Economic Development Commission at (501) 682-1121 or visit their website at http://arkansasedc.com/.
Existing Workforce Training Act (ACA §6-50-701 et seq.)
To qualify, the business must be classified as one of the following: manufacturers classified in NAICS codes 31-33; computer firms primarily engaged in the design and development of prepackaged software, digital content production and preservation, computer processing and data preparation services, or informational retrieval services, all of which must derive at least 75% of their revenue from out-of state sales; certain motion picture production businesses; certain intermodal facilities or distribution centers; certain office sector businesses; firms primarily engaged in commercial, physical, and biological research as classified under NAICS code 541710; certain national or regional headquarters classified under NAICS code 551114; certain scientific and technical services businesses; all building trade industries classified under NAICS codes 236 and 238; air transport businesses primarily engaged in aircraft maintenance, repair services, and aircraft testing as classified under NAICS code 488190; and certain nonretail businesses approved by the Director of the Arkansas Economic Development Commission.
Eligible companies that use state supported educational institutions for classroom training are eligible for either a grant or income tax credit, while a consortium can only receive a grant, for the lesser of ½ of the amount paid by the company to the educational institution or the instructional hour rate (not to exceed $80 per hour with 50% or more students completing the course, or not to exceed $35 per instructional hour if less than 50% of participants completing the course), times the number of instructional hours. If the training is for safety related purposes the hourly rate the governing council may approve cannot exceed $35 per instructional hour. If the company uses company employees or paid consultants to deliver the classroom training, the amount of assistance shall not be more than $25 per instructional hour, which can only be in the form of an income tax credit. There is no carry forward period for this credit.
To claim the credit authorized the original Certificate of Tax Credit issued by the Arkansas Economic Development Commission to your income tax return.
For further information regarding the Arkansas Existing Workforce Training Program, contact Arkansas Economic Development Commission at (501) 682 1121
Family Savings Initiative (ACA §20-86-109)
Ark. Code Ann. § 20-86-109 provides for the Family Savings Initiative Act, effective July 1, 1999, which provides a tax credit to those taxpayers who make contributions to a designated fiduciary organization created pursuant to the Act. The fiduciary will notify the Department of Human Services of the deposits and will issue a certificate to be attached to the tax return for the first year the credit is taken. The credit allowed is the lesser of the income tax due or $25,000 per taxpayer. The total tax credit allowed for all taxpayers is $100,000 per year. Any unused credit may be carried forward for the next 3 succeeding tax years or until exhausted, whichever occurs first.
For information regarding application into the Family Savings Initiative tax credit, contact Department of Human Services at (501) 682-1001.
Historic Rehabilitation Income Tax Credit Act (ACA §26-51-2201 et seq.)
ACA § 26-51-2204 (Act 48 of 2009) provides an income tax or premium tax credit to owners of eligible property that have received a certification of completion from the Department of Arkansas Heritage. The credit is equal to 25% of total qualified rehabilitation expenses on the first $500,000 expenses on income-producing property; or $100,000 of qualified expenses on non-income-producing property. The income tax credit shall be available to an owner of an eligible property that completes a certified rehabilitation that is placed in service after January 1, 2009; has a minimum investment of $25,000; and is not receiving a tax credit under any other state law for the same eligible property.
ACA § 26-51-2204 as amended by Act 567 of 2015 states that the income tax credit is allowed only one (1) time in twenty-four-month period for each eligible property.
ACA § 26-51-2204 as amended by Act 393 of 2017, projects that starts on or after July 1, 2017, $1,600,000 of qualified rehabilitation expenses on income-producing property; or $100,000 of qualified rehabilitation expenses on non-income-producing property.
ACA § 26-51-2204, as amended by Act 470 of 2019 provides a minimum investment of twenty-five thousand dollars ($25,000) in qualified rehabilitation expenses on income-producing properties; or five thousand dollars ($5,000) in qualified rehabilitation expenses on non-income-producing properties and is not receiving a tax credit under any other state law for the same eligible property.
The credit may be transferred or sold. Any unused credit may be carried forward for 5 consecutive years.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by Department of Arkansas Heritage.
For information regarding application into the Historic Rehabilitation Income Tax Credit, contact Department of Heritage at (501) 324-9347.
In-House Research in Area of Strategic Value Income Tax Credit (ACA 15-4-2708(d))
The Consolidated Incentive Act 182 of 2003, as amended by Act 1596 of 2007, authorizes an income tax credit equal to 33% of qualified research expenditures for an Arkansas taxpayer that invests in: (A) In-house research in an area of strategic value; or (B) A project under the research and development programs offered by the Arkansas Science and Technology Authority and approved by its Board of Directors.
The taxpayer must apply to the Arkansas Economic Development Commission in order to qualify for the income tax credit. Research is of strategic value meaning research in fields having long-term economic. The tax credit may be earned for the first five (5) years following the signing of a financial incentive agreement. The maximum tax credit that may be claimed by a taxpayer under this program is $50,000 per tax year. The carry forward is nine (9) years beyond the year in which the credit was first earned.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by the Arkansas Science and Technology Authority.
For information regarding application into the In-House Research in Areas of Strategic Value Income Tax Credit Program, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/
In-House Research by Targeted Business Income Tax Credit (ACA §15-4-2708(c))
The Consolidated Incentive Act 182 of 2003, as amended by Act 1596 of 2007, provides for income tax credits for businesses deemed by the Arkansas Economic Development Commission to fit within the six (6) business sectors classified as “targeted businesses” may enter into a financial incentive agreement for income tax credits based on qualified research and development expenditures. An eligible business may be approved for an income tax credit each year equal to 33% of the qualified research and development expenditures incurred each year for the first five (5) years of the financial incentive agreement. As with the job creation income tax credits for targeted businesses, the income tax credit for research and development earned by targeted businesses may be sold. The business must make application to the AEDC within one year of issuance. The credits can only be sold one time. Any unused credits may be carried forward for a maximum of nine (9) years.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by the Arkansas Science and Technology Authority.
For information regarding application into the In-House Research by Targeted Business Income Tax Credit Program, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/
In-House Research Income Tax Credit (ACA §15-4-2708(b))
The Consolidated Incentive Act 182 of 2003, as amended by Act 1596 of 2007, authorizes an income tax credit to eligible businesses that conduct “in-house” research within a research facility that is operated by the eligible business. Prior to July 31, 2007, the credit allowed for approved in-house research is 10% of qualified expenditures. However, the maximum credit that can be earned by each qualified business shall not exceed $10,000 per tax year.
Effective July 31, 2007 Act 1596 of 2007 provides that new or existing eligible businesses that conduct in-house research in a research facility operated by the business and that qualify for federal research and development tax credits may qualify for an income tax credit equal to twenty-percent (20%). The income tax credit may be used to offset one hundred percent (100%) of an eligible business’s annual income tax liability. Unused credits may be carried forward for a period not to exceed nine (9) years.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by the Arkansas Science and Technology Authority.
For information regarding application into the In-House Research Income Tax Credit Program, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/
Investark Program Sales and Use Tax Credit (ACA §15-4-2706(c)) – Sunset by Act 465 of 2017 (no new projects after June 30, 2017)
The Consolidated Incentive Act 182 of 2003, as amended, provides the InvestArk Program sales and use tax credit to qualified established businesses in Arkansas that invest $5 million or more at a single location in plant or equipment for new construction, expansion, or modernization. All project cost must be incurred within four (4) years from the date the project is approved by the Arkansas Economic Development Commission. In order to qualify a business must have been in continuous operation in the state for at least two (2) years. A credit against the business’ state direct-pay sales and use tax liability, equal to one-half percent (1/2%) above the sales and use tax rate in effect at the time of application, is earned based on the total eligible projects costs. The credit may be applied against the business’s direct-pay state sales and use tax liability in the year following the year of expenditure. Any unused credits may be carried forward for a period of up to five (5) years. In any year, tax credits taken under this program cannot exceed 50% of the business’ direct-pay sales and use tax liability on taxable purchases.
To receive incentives under this program, the qualifying business must apply to the Arkansas Economic Development Commission. For information regarding application into the InvestArk Program, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/.
Low Income Housing Credit (ACA §26-51-1702)
An income tax credit for taxpayer owning an interest in a qualified low income building which is approved through the Arkansas Development Finance Authority. The tax credit is computed by multiplying the Federal Low Income Housing Tax Credit for the qualified project by 20%. The credit may not exceed the income tax otherwise due. Any unused credit may be carried forward for the next five (5) succeeding tax years or until exhausted, whichever comes first.
To claim the credits authorized attach the original certificate of approval (eligibility statement) to your income tax return.
For information regarding application into the Low Income Housing Credit, contact Arkansas Development Finance Authority at (501) 682-5900 or visit their website at http://www.arkansas.gov/adfa/.
Motion Picture Incentives (ACA §15-4-2001 et seq.)
The Digital Product and Motion Picture Industry Development Act of 2009 as amended by Act 367 of 2019 and Act 797 of 2021 provides a rebate or tax credit to qualifying production companies that have been approved by the Arkansas Economic Development Commission. The rebate/credit is equal to 20% of production and post-production costs in connection with a state-certified film project. The tax credit has a five-year carry-forward and may be sold or transferred by the production company. Additionally, a 10% payroll rebate may be authorized for certain payroll of full-time Arkansas residents or Veterans.
To receive incentives under this program, the qualifying production company must apply to the Arkansas Economic Development Commission. For information regarding application into the Motion Picture Incentive Program, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/.
Nonprofit Incentive Act of 2005 (ACA §15-4-3101 et seq.) Rebates and Refunds – Repealed by Act 208 of 2017
Act 1277 of 2005, as amended by Act 795 of 2009, allows incentives in the form of state and local sales and use tax refunds, and payroll rebates, to eligible nonprofit organizations approved by the Arkansas Economic Development Commission (AEDC). The sales and use tax refund is based on the tax paid, excepting the taxes dedicated to the Educational Adequacy Fund and the Conservation Tax Fund, for materials purchased by the nonprofit organization for the construction or improvement of a building housing the nonprofit organization, and machinery or equipment located in or in connection with the building, providing the organization spends at least $250,000 for these purchases.
The payroll rebate is conditioned on the financial incentive agreement between the nonprofit organization and AEDC. The nonprofit organization must have a minimum annual payroll of $500,000 for its new full-time permanent employees to qualify for the payroll rebate and sales tax refund. The rebate is equal to 4% of the annual payroll and may be authorized by AEDC for up to 5 years.
For information regarding application into the Nonprofit Organization Incentive Program, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/
Philanthropic Investment In Arkansas Kids Program (ACA §6-18-2201)
Act 904 of 2021 provides educational scholarship grants for eligible students to attend non-public schools. Act 904 provides an income tax credit to donors equal to 100% of contributions to scholarship-granting organizations (SGO’s). The credit may not exceed an eligible taxpayer’s income tax due. Unused income tax credits may be carried forward for three years. The Office of Tax Credits/Special Refunds of the Arkansas DFA will issue tax credits on a first-come, first-served basis up to $6,000,000 per calendar year. Maximum available tax credits may increase by 5% per calendar year thereafter if 90% of the credits available are awarded during any calendar year.
The Division of Elementary and Secondary Education (DESE) of the Department of Education will track grants and prepare an annual report on the program.
Any unused credit may be carried forward for 3 consecutive years.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by Tax Credits/Special Refunds section of the Arkansas Department of Finance and Administration.
The email address is [email protected]
The form is located at Tax Credits/Special Refunds – Tax Credits and Special Refunds Forms.
Public Roads Improvements Credit (ACA §15-4-2306)
Act 1347 of 1999, amended by Act 628 of 2021 provides an income tax credit for taxpayers that contribute to the Public Roads Incentives Fund of the Arkansas Economic Development Commission. The credit is equal to 33% of the taxpayer’s contribution. The credit may offset up to 100% of the taxpayer’s income tax liability after all other credits and reductions in tax have been calculated. Any unused credit may be carried forward for ten (10) years.
To claim the credit authorized attach the certification letter issued by the Arkansas Economic Development Commission to your income tax return.
For information regarding application into the Public Roads Improvement Program, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/.
Railroad Modernization Act (ACA §26-51-2701)
Act 967 of 2021 provides an income tax credit equal to 50% of the eligible taxpayer’s railroad track maintenance expenditures. Eligible taxpayer means a railroad classified as a Class II or Class III railroad by the United States Surface Transportation Board. Expenditures are for maintenance, reconstruction, or replacement of railroad track. The maximum amount of credit is $5,000 per mile of track owned or leased by the railroad. This is a non-refundable credit and can be carried forward for up to five (5) years. This credit may be transferred or sold by written agreement that is filed with the Department of Finance and Administration.
For information regarding application into the Railroad Modernization Act, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/
Railroad Modernization Tax Credit Transfer Form
Research Park Authority (ACA § 26-51-1102(c))
Ark. Code Ann. § 26-51-1102(c) authorizes a credit against a taxpayer’s Arkansas corporate income tax or Arkansas individual income tax equal to thirty-three percent (33%) of a donation made to an accredited institution of higher education to support a research park authority. In order to claim this credit, a donation made in support of a research park authority shall: Be consistent with the research and development plan approved by the Board of Directors of the Arkansas Science and Technology Authority, as evidenced by a letter of support from the President of the Arkansas Science and Technology Authority; and Support either directly or indirectly research subject to being funded by one (1) or more federal agencies. Funds used under the provisions of this subchapter shall be used for the purposes of matching an approved grant from an eligible federal agency, limited to the following: The National Science Foundation; The National Institutes of Health; The Department of Energy; The Department of Defense; The Environmental Protection Agency; The National Aeronautics and Space Administration; The Department of Agriculture; The Department of Transportation; The Department of Commerce; The Department of Education; and The Department of Homeland Security.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by the Education Institution.
For information regarding application into the Research Park Authority Program, contact Arkansas Science and Technology Authority at (501) 682-4400 or visit their website at www.asta.arkansas.gov.
Research & Development with Universities Tax Credit (ACA §15-4-2708(a))
The Consolidated Incentive Act 182 of 2003, amended by Act 1596 of 2007, authorized an income tax credit to an eligible business that contracts with one or more Arkansas colleges or universities in performing research may qualify for a 33% income tax credit as authorized by ACA 26-51-1102(b) for qualified research expenditures. The income tax credit may be carried forward for three (3) years beyond the year in which the credit was earned. Effective July 31, 2007 Act 1607 of 2007 changed the carry forward to nine (9) years and increased the use of the credit from 50% to 100% of the net tax due after all other credits. In order to qualify for the income tax credit for research and development with universities, an eligible business must submit an application and project plan to the Arkansas Economic Development Commission. The Arkansas Science and Technology Authority will review the application for approval.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by the Arkansas Science and Technology Authority.
For information regarding application into the Research & Development with Universities Tax Credit Program, contact Arkansas Science and Technology Authority at (501) 682-4400 or visit their website at www.asta.arkansas.gov.
Rice Straw Tax Credit ACA §26-51-512
Ark. Code Ann. 26-51-512, Act 2247 of 2005 allows for an income tax credit in the amount of $15.00 for each ton of rice straw in excess of 500 tons that is purchased by an Arkansas taxpayer who is the end user of the straw (person who purchases and uses the straw for processing, manufacturing, generating energy or producing ethanol). The amount of the credit is limited to 50% of the income tax due for the tax year. Unused credit may be carried forward for 10 consecutive tax years following the year in which the credit is earned.
This act is effective for tax years beginning on or after January 1, 2006.
Qualified Research (ACA §26-51-1102(b))
Ark. Code Ann. § 26-51-1102(b) authorizes a credit against a taxpayer’s Arkansas corporate income tax or Arkansas individual income tax equal to thirty-three percent (33%) of the qualified research expenditures of a taxpayer in qualified research programs. To claim the credit, the taxpayer must show that the Arkansas Science and Technology Authority and the Department of Higher Education have approved the qualified research expenditure as a part of a qualified research program.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by the Arkansas Science and Technology Authority.
For information regarding application into the Qualified Research Program, contact Arkansas Science and Technology Authority at (501) 682-4400 or visit their website at www.asta.arkansas.gov
Targeted Business Tax Back Sales and Use Tax Refund (ACA §15-4-2706(e)
A new targeted business shall be eligible for a refund of state and local sales and use taxes for qualified expenditures identified in the project plan if the annual payroll of the business for Arkansas taxpayers is greater than one hundred thousand dollars ($100,000); and the business shows proof of an equity investment of at least two hundred fifty thousand dollars ($250,000).
After the Director of the Arkansas Economic Development Commission has determined that the project is eligible for the sales and use tax refund, this determination accompanied by the financial incentive agreement and any other pertinent documentation shall be forwarded to the Director of the Department of Finance and Administration.
For information regarding application into the Targeted Business Tax Back Sales and Use Tax Refund Program, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/
Targeted Business Payroll Income Tax Credit (ACA §15-4-2709)
The Consolidated Incentive Act 182 of 2003, as amended by Act 1596 of 2007, provides for income tax credits to “targeted businesses” approved by the Arkansas Economic Development Commission (AEDC). Companies that are doing business in a targeted business sector and pay wages that are 150% of the state or county average wage, whichever is less, and that meet the requisite payroll and investment thresholds may qualify. The income tax credits earned under this program may be sold upon approval by the AEDC. The buyer of the tax credit shall be subject to the same provisions for carry forward of the tax credits as the business that originally earned the credits. Any unused credits may be carried forward for a maximum of nine (9) years.
The benefit for a targeted business for job creation is an income tax credit based on 10% of its annual payroll, with a cap of $100,000 per year in earned income tax credits for a business that qualifies and is approved for this incentive. The incentive may be offered for a period not to exceed five (5) years. This targeted job creation income tax credit may include existing employees in the calculation of payroll to qualify for this benefit.
To claim the income tax credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by DFA Revenue- Tax Credits/Special Refunds Section.
For information regarding application into the Targeted Business Payroll Income Tax Credit Program, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/
Tax Back Sales and Use Tax Refund (ACA § 15-4-2706(d))
The Consolidated Incentive Act 182 of 2003, as amended, provides for TaxBack Program sales and use tax refunds on the purchase of building materials and machinery and equipment to qualifying businesses that create new jobs as a result of construction, expansion, or facility modernization projects in Arkansas. This incentive program is available to all eligible businesses that meet the qualifications for investment and payroll thresholds for the county tier in which it locates or expands and are approved for benefits by the Arkansas Economic Development Commission. The approval is contingent upon receipt of a complete application and a local endorsement resolution for the city, county or both which authorizes the refund of its local taxes to the eligible company. To qualify, the eligible business must invest in excess of one hundred thousand dollars ($100,000) and meet the eligibility criteria of the Advantage Arkansas or the Create Rebate job creation incentive program. The refund of state sales and use taxes shall not include the refund of taxes dedicated to the Educational Adequacy Fund and the taxes dedicated to the Conservation Tax Fund.
ACA § 15-4-2706(d) as amended by Act 327 of 2019 states, to qualify for a refund, a qualified business shall meet the minimum investment thresholds for the tier in which the qualified business expands or locates.
To receive incentives under this program, the qualifying business must apply to the Arkansas Economic Development Commission. For information regarding application into the Tax Back Sales and Use Tax Refund Program, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/
Tourism Project Development Tax Credits (ACA §15-11-501 et seq.)
Act 291 of 1997, as amended by Act 1135 of 1999, and Act 2308 of 2005, allows an income tax and sales tax credits for a tourism attraction approved by the Arkansas Economic Development Commission. An eligible company must invest at least $500,000 if it locates in a high-unemployment county of at least $1,000,000 if located in any other county.
Income Tax Credit: The income tax credit is equal to four-percent (4%) of the payroll of the new full-time permanent employees of the approved tourism attraction project qualifying for benefits under this act.
The tax credit shall be used for the taxable year in which the net new permanent employees were hired. If the entire credit cannot be used in the year earned, the remainder may be applied against the income tax for the succeeding nine (9) years or until the credit is entirely used, whichever occurs first.
To claim the income tax credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by Tax Credits/Special Refunds Section.
Sales Tax Credit: The sales tax credit is equal to 15% of all approved costs is allowed for the approved company; however the credit is equal to 25% if the business is located in a high-unemployment county. These credits may be used to offset that portion of the increased state sales tax liability during the first year if its tax liability is equal to or greater than the amount of credit issued. Unused credits may be carried forward for nine (9) years. All issued credit memorandum shall expire at the end of the month following the expiration of the agreement.
To claim the sales tax credits authorized, a Certificate of Tax Credit must be authorized by DFA Revenue- Tax Credits/Special Refunds Section.
For information regarding application into the Tourism Project Development Credit Program, contact Arkansas Economic Development at (501) 682-1121 or visit their website at http://arkansasedc.com/
Tuition Reimbursement Tax Credit Program (ACA 26-51-1901 et seq.)
Act 1036 of 1999 as amended provides an income tax credit for companies that reimburse full-time employees or pay for the cost of tuition, books and fees for a program of undergraduate or postgraduate education from an accredited institution of post-secondary education located in Arkansas. The credit is equal to 30% of the reimbursement, but cannot exceed 25% of the business’ income tax liability in any year.
Eligible businesses are manufacturers classified in NAICS sectors 31-33; certain computer businesses which derive 75% of their revenue from out-of-state sales and have less than 10% retail sales to the general public; motion picture production businesses which derive 75% of their revenue from out-of-state sales and have less than 10% retail sales to the general public; certain distribution centers; certain office sector businesses; certain corporate or regional headquarters; a firm engaged in commercial, physical and biological research as classified in NAICS code 541710; certain scientific and technical services businesses; or any other business classified as eligible by the Director of the Arkansas Economic Development Commission. There is no carry forward for this credit.
To claim the credits authorized, attach to the tax return a completed form AR 1036.
EMPLOYEE TUITION REIMBURSEMENT TAX CREDIT FORM
Venture Capital Investment (ACA §15-5-1401 et seq.)
ACA §15-5-1401 et seq. provides an income tax credit up to $10 million per fiscal year as recommended by the Arkansas Development Finance Authority and approved by the State Board of Finance. The credit may not exceed the income tax otherwise due and is non-refundable. Any unused credit may be carried forward for five (5) succeeding tax years after the tax year in which the credit was first used.
For information regarding application into the Venture Capital Investment credit, contact Arkansas Development Finance Authority at (501) 682-5900 or visit their website at www.arkansas.gov/adfa/.
Waste Reduction and Recycling Equipment Credit (ACA §26-51-506)
Act 748 of 1991, as amended by Act 654 of 1993 authorizes an income tax credit equal to 30% of the cost of waste reduction, reuse, or recycling equipment, including the cost of installation of such machinery and equipment. To become eligible, the company must obtain a certification from the Arkansas Department of Environmental Quality stating that the taxpayer is engaged in the business of reducing, reusing, or recycling solid waste material for commercial purposes.
The credit used for a taxable year may not exceed the individual or corporation income tax due. Any unused credit may be carried over for a maximum of three (3) consecutive years, unless the business is a qualified steel mill that has invested more than $200,000,000, and then the carry forward period is fourteen (14) years.
A taxpayer claiming the credit shall not be entitled to claim any other credit or deduction based on the purchase price of the equipment, except for the deduction for normal depreciation.
To claim the credits authorized, attach to the tax return a copy of the Certificate of Tax Credit issued by the Arkansas Department of Environmental Quality.
For information regarding application for Waste Reduction and Recycling Credit, please contact Department of Pollution Control and Ecology at (501) 682-0588 or visit their website at www.aedq.state.ar.us
