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ArkansasHB19352025 Regular SessionHouse

TO CREATE A MODERNIZATION AND AUTOMATION TAX CREDIT TO ENCOURAGE INVESTMENT BY EXISTING BUSINESSES WITHIN THE STATE.

Sponsored By: Les D. Eaves (Republican), Ben Gilmore (Republican)

Enacted

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Bill Overview

Analyzed Economic Effects

2 provisions identified: 0 benefits, 1 costs, 1 mixed.

Businesses cannot stack these tax benefits

Beginning October 1, 2025, businesses cannot combine the Arkansas investment credit and modernization and automation credit for the same project. Also, expenses eligible for the increased major maintenance and improvement tax refund cannot qualify for the modernization and automation credit. These limits apply to the same project or expense, not all of a business's separate investments.

Arkansas business tax credit with conditions

Beginning October 1, 2025, eligible Arkansas businesses get a modernization and automation credit against state sales and use taxes. The credit equals up to 5% of eligible project costs, with no more than $2 million used per applicant each fiscal year. Unused credits carry forward for up to five years beyond the year earned. Businesses must have operated continuously in Arkansas for at least two years and incur at least $25 million in project costs. Costs can include land, buildings, and equipment for construction, expansion, or modernization. For building or equipment leases lasting at least five years, the first five years of payments can count. Before applying, businesses must hold a state direct-pay sales and use tax permit. Projects need a positive commission cost-benefit review, and credit eligibility depends on compliance with that review. Except for preconstruction costs, businesses must apply before spending, and only costs incurred after commission approval qualify. Eligible costs must fall within six years after the incentive agreement is approved; the general window for other eligible projects is four years. The project must be completed within six years after the agreement is signed. Businesses must maintain their current yearly average Arkansas payroll and employment during the project and for 24 months afterward. The agreement requires repayment of credits if the business breaks its terms. Businesses must certify project spending at year-end; the tax department provides claim forms, determines the prior year's credit, and issues a credit memorandum. Businesses also seeking a job-creation tax credit must have both final incentive agreements approved within one year of each other.

Sponsors & Cosponsors

Sponsors

  • Les D. Eaves

    Republican • House

  • Ben Gilmore

    Republican • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 111 • No: 14

Senate vote • 4/14/2025

Senate Vote - Monday, April 14, 2025 3:34:55 PM

Yes: 30 • No: 1 • Other: 2

House vote • 4/9/2025

House Vote - Wednesday, April 9, 2025 2:45:57 PM

Yes: 81 • No: 13 • Other: 5

Actions Timeline

  1. Notification that HB1935 is now Act 882

    4/17/2025House

  2. Correctly enrolled and ordered transmitted to the Governor's Office.

    4/15/2025House

  3. TO BE ENROLLED

    4/14/2025House

  4. Returned from the Senate as passed.

    4/14/2025House

  5. Returned to the House as passed.

    4/14/2025Senate

  6. Read the third time and passed.

    4/14/2025Senate

  7. Returned by the Committee, with the recommendation that it Do Pass

    4/10/2025Senate

  8. Read first time, rules suspended, read second time, referred to REVENUE & TAX - SENATE

    4/9/2025Senate

  9. Received from the House.

    4/9/2025Senate

  10. Read the third time and passed and ordered transmitted to the Senate.

    4/9/2025House

  11. REPORTED CORRECTLY ENGROSSED

    4/8/2025House

  12. Amendment No. 1 read and adopted and the bill ordered engrossed.

    4/8/2025House

  13. Placed on second reading for the purpose of amendment.

    4/8/2025House

  14. Returned by the Committee with the recommendation that it do pass as amended 1

    4/7/2025House

  15. Read the first time, rules suspended, read the second time and referred to the Committee on REVENUE & TAXATION- HOUSE

    3/31/2025House

  16. Filed

    3/31/2025House

Bill Text

  • HB1935 - Introduced

    3/31/2025

    PDF

  • Act Version

    PDF

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