Incentives & Taxes
(Sales & Use Tax Refund)
The Tax Back program provides state and local sales and use tax refunds on the purchase of building materials and taxable machinery and equipment to qualified businesses investing at least $100,000 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 met the requirements of an Advantage Arkansas or Create Rebate agreement within the previous 48 months.
Property Tax Abatement
Businesses that use either tax-exempt or taxable industrial revenue bond financing can negotiate with Little Rock and Pulaski County a property tax abatement for both real and personal property. The maximum amount of property tax that can be abated in Arkansas is 65 percent.
(Income Tax Credit)
ArkPlus is a state income tax credit program that provides tax credits of 10 percent of the total investment in a new location or expansion project. This discretionary incentive is offered in highly competitive situations.
Recycling Tax Credit
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 and the cost of installation of such equipment by outside contractors. The amount of the tax credit shall equal 30 percent of the cost of equipment and installation costs deemed eligible by the Arkansas Department of Environmental Quality. Credits may be carried forward for three consecutive years following the taxable year in which the credits accrued.
Job Creation Incentives
Create Rebate provides annual cash payments based on a company’s annual payroll for new, full-time, permanent employees. In order to qualify, the company must create a minimum of $2 million annually in new payroll. The minimum payroll must be met within 24 months of the effective date of the financial incentive agreement. This discretionary incentive is offered in highly competitive situations.
(Governor’s Quick Action Closing Fund, Community Development Block Grants)
AEDC shares the cost of project infrastructure needs by committing grants from state and federal infrastructure funds. The amount of assistance committed is dependent upon the strength of the company, number of jobs, average wage, project investment and costs associated with facility/site improvements.
(Income Tax Credit)
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. The Advantage Arkansas income tax credit is earned each tax year for a period of five years. The income tax credit may be carried forward for nine years beyond the tax year in which the credit was first earned.
Machinery and equipment used directly in manufacturing that are purchased for a new manufacturing facility or to replace existing machinery and equipment are exempt from state and local sales and use tax.
Arkansas’s Freeport Law exempts from property tax those finished goods and raw materials in transit or awaiting shipment to out-of-state companies.
Sales Tax Reduction for Power
The State of Arkansas has a reduced sales and use tax rate of 0.625 percent on electricity and natural gas used directly in the manufacturing process.
Repair & Replacement Parts
Sales and use tax on repair and replacement parts will be fully exempted on July 1, 2022 with one percent reductions beginning on July 1, 2018.
Training resources are available through the Office of Skills Development within the Department of Commerce. The Office of Skills Development Grant Program funds are disbursed as a matching grant paid as post-training reimbursements for training.
FTZ Advantages & Incentives
What are the benefits to a zone user?
- Duty Exemption. No duties on or quota charges on re-exports.
- Duty Deferral. Customs duties and federal excise tax deferred on imports.
- Inverted Tariff. In situations where zone production results in a finished product that has a lower duty rate than the rates on foreign inputs (inverted tariff), the finished products may be entered at the duty rate that applies to its condition as it leaves the zone (requires prior authorization).
- Logistical Benefits. Companies using FTZ procedures may have access to streamlined customs procedures (e.g. “weekly entry” or “direct delivery”).
- Other Benefits. Foreign goods and domestic goods held for export are exempt from state/local inventory taxes. FTZ status may also make a site eligible for state/local benefits which are unrelated to the FTZ Act.
In the State of Arkansas, we are constantly monitoring our tax system to make sure our policies and practices create a fair and equitable marketplace for our business and industries. Below are some highlights of the state’s tax structure.
Sales and Use Tax
(combined state and local)
Corporate Franchise Tax
(of outstanding capital stock)
Unemployment Insurance Tax
(for new businesses)