Arkansas

Tax Back program provides sales and use tax refunds on the purchase of building materials and taxable machinery and equipment to qualified businesses investing the minimum required based on the tier in which the company locates and who either a) sign a job creation agreement under the Advantage Arkansas or Create Rebate programs within 24 months of signing the Tax Back agreement or b) have signed an Advantage Arkansas or Create Rebate agreement within the previous 48 months.
Equity Investment Incentive Program is a discretionary incentive targeted toward new, technology-based businesses paying wages in excess of the state or county average wage. If offered, this program allows an approved business to offer an income tax credit to investors purchasing an equity investment in the business. The income tax credit/credits issued under this program are equal to 33 1/3% of the amount invested by an investor in an eligible business. The income tax credit earned may be used to offset 50% of the investor’s Arkansas income tax liability in any one tax year. Any unused credit may be carried forward for a period of nine years. The income tax credit earned may be sold upon approval by AEDC.
Research and Development Incentives are provided for university-based research, in-house research, and research and development in start-up, technology-based enterprises. Tax credits under these programs may be carried forward for nine years and may offset up to 100% of a business’ tax liability in a given year.
Advantage Arkansas offers a state income tax credit for job creation based on the payroll of new, full-time, permanent employees hired as a result of the project. In order to qualify, the proposed average hourly wage of the new employees hired as a result of the project must be equal to or greater than $14.11. The tax credit is earned each tax year for a period of five years. The income tax credit cannot offset more than 50% of a business’ income tax liability in any one year.
ArkPlus is a state income tax credit program that provides tax credits of 10% of the total investment in a new location or expansion project. The income tax credits may be used to offset 50% of the Arkansas income tax liability in the tax year the credit is earned. Any unused credits may be carried forward for nine years beyond the tax year in which the credit was first earned.
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.
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.
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.
Discretionary Payroll Income Tax Credit for targeted businesses assists start-up businesses in targeted sectors that pay significantly more than the state or county average wage of the county in which the business locates.
Arkansas offers tax incentives for businesses that provide childcare for their employees.
Create Rebate provides annual cash payments based on a company’s annual payroll for new, full-time, permanent employees. Benefits are available after the business certifies to the Arkansas Department of Finance & Administration that it has fulfilled the terms of the financial incentive agreement and the reported payroll has been verified. The percentage of the benefit depends on the tier assignment of the county where the job creation occurs.
Targeted businesses with payrolls exceeding $250,000 may be offered, at the discretion of the AEDC Executive Director, rebates of five percent of payroll for up to ten years. To qualify, the average hourly wage of the new, full-time permanent employees must be at least 150% of the state or county average hourly wage, whichever is less. The payroll rebate for targeted businesses may not be used in conjunction with the payroll income tax credit for targeted businesses. These targeted businesses may also be offered income or sales and use tax credits based upon investment. Prior to the execution of the financial incentive agreement, the targeted business must elect to receive the credits as sales and use tax credits or income tax credits.