All Roll Calls
Yes: 131 • No: 0
ArkansasSB5672025 Regular SessionSenate
TO AMEND AND MODERNIZE THE LAW CONCERNING THE APPORTIONMENT OF INCOME DERIVED FROM MULTISTATE OPERATIONS; AND TO CHANGE THE METHOD FOR SOURCING OF RECEIPTS FOR SERVICES AND INTANGIBLES.
Sponsored By: Steve Crowell (Republican), Rebecca Burkes (Republican)
Enacted
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Bill Overview
Analyzed Economic Effects
6 provisions identified: 1 benefits, 1 costs, 4 mixed.
Exporting businesses count fewer Arkansas receipts
Arkansas phases out counting certain goods shipped from Arkansas locations to buyers in states where the seller is not taxable. The schedule counts 85.71% in 2024, 71.42% in 2025, 57.13% in 2026, and 42.84% in 2027. It counts 28.55% in 2028, 14.26% in 2029, and 0% for tax years beginning January 1, 2030, or later. The act's overall effective date covers tax years beginning January 1, 2026, despite the schedule's earlier entries. Goods delivered or shipped to Arkansas buyers still count as Arkansas receipts.
Remote businesses face Arkansas income tax
Beginning with tax years starting January 1, 2026, nonresident corporations and partnerships can become taxable without physical presence in Arkansas. Covered Arkansas receipts must exceed $250,000 in the current or immediately preceding tax year. Physical presence includes property, employees, agents, or representatives. Crossing the threshold creates Arkansas income-tax obligations, but the threshold does not set the tax amount.
Business taxes follow service delivery locations
For tax years beginning January 1, 2026, Arkansas generally counts service receipts where services are delivered. Property receipts follow the property's location; intangible-property receipts generally follow where rights are used, including covered geographic rights. Businesses must reasonably estimate locations they cannot determine. Receipts are removed from the formula's total when assignment cannot be determined or reasonably estimated, or the business is not taxable there. Where another state imposes a specified income or business-activity tax, businesses must be subject to it and file the required return. Where it imposes none, business activities must exceed federal protections under 15 U.S.C. §§ 381–384 to count as taxable there.
Businesses get a receipts-based tax formula
For tax years beginning January 1, 2026, Arkansas uses one receipts-based formula to divide multistate business income. Arkansas's share equals covered income times Arkansas receipts divided by receipts everywhere. Covered income includes income the Constitution allows Arkansas to divide and that state law does not assign separately. It also includes constitutionally allocable income that Arkansas instead divides, including income from business-related property. Receipts generally cover regular business transactions, but exclude hedging transactions and dispositions of cash or securities.
Businesses get tax safeguards and limits
For tax years beginning January 1, 2026, Arkansas's finance secretary can set uniform alternatives when standard rules misrepresent Arkansas business activity. Alternatives include separate accounting, added factors, or other reasonable methods. The requesting party generally must prove the standard method unfair and the alternative reasonable. The secretary avoids that burden after showing the taxpayer used a different method in at least two of five prior tax years. Reasonable reliance solely on the statutory method protects businesses from civil or criminal penalties. Written permission generally protects completed transactions unless relevant facts materially change or were materially misrepresented.
Communications businesses get another tax option
Businesses mainly providing telecommunications, mobile service, internet access, cable television, satellite services, or combinations can choose activity-based receipt sourcing. The option covers tax years beginning on or after January 1, 2026, but before December 31, 2035. They must choose it on their first eligible tax return; later changes require the state finance secretary's written approval. Receipts follow where income-producing work occurs. For work across states, Arkansas counts receipts only when its share of performance costs exceeds every other state's share.
Sponsors & Cosponsors
Sponsors
Steve Crowell
Republican • Senate
Rebecca Burkes
Republican • House
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
House vote • 4/9/2025
House Vote - Wednesday, April 9, 2025 7:30:45 PM
Yes: 96 • No: 0
Senate vote • 4/7/2025
Senate Vote - Monday, April 7, 2025 2:52:41 PM
Yes: 35 • No: 0
Actions Timeline
Notification that SB567 is now Act 719
4/18/2025SenateDELIVERED TO GOVERNOR.
4/10/2025SenateReported correctly enrolled and ordered delivered to the Governor.
4/10/2025SenateORDERED ENROLLED
4/9/2025SenateReturned from the House as passed.
4/9/2025SenateReturned to the Senate as passed.
4/9/2025HouseRead the third time and passed and ordered transmitted to the Senate.
4/9/2025HouseReturned by the Committee Do Pass
4/8/2025HouseRead the first time, rules suspended, read the second time and referred to the Committee on REVENUE & TAXATION- HOUSE
4/7/2025HouseRECEIVED FROM THE SENATE
4/7/2025HouseOrdered immediately transmitted to the House.
4/7/2025SenateRead the third time and passed.
4/7/2025SenateReturned by the Committee, with the recommendation that it Do Pass
4/2/2025SenateRead first time, rules suspended, read second time, referred to REVENUE & TAX - SENATE
3/31/2025SenateFiled
3/27/2025Senate
Bill Text
SB567 - Introduced
3/27/2025
Act Version
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