Summary of 2021 Arkansas Tax Credits and Incentives Legislation

Act 563 extends the period for completing a water conservation project under the Water Resource Conservation and Development Incentives Act to five years (instead of three years). Effective retroactive for all projects for which a certificate was issued on or after January 1, 2017.

Act 594 establishes a new Arkansas Wood Energy Products and Forest Maintenance Income Tax Credit for wood energy products in an amount equal to 30% of wood energy product equipment cost incurred by a business that has dedicated at least $50,000,000 to a wood energy project.

Act 628 enhances the utilization of public roads improvements tax credits by allowing offset of 100% of income tax instead of 50% and by extending the carryforward from three to ten years. Effective for tax years on or after January 1, 2020.

Act 797 adds an additional credit of 10% for the payrolls of below-the-line resident or veteran employees, targeted expenditures, and the Arkansas uplift promotion under the Digital Product and Motion Picture Industry Development Act.

Act 840 increases the annual income tax credits cap for Arkansas historic rehabilitation from $4,000,000 to $8,000,000 beginning in the fiscal year ending Jun 30, 2022. The sunset for the tax credit is extended 10 years (to 2037).

Act 841 authorizes an income tax credit of up to $3,500 for law enforcement officers who are retired and perform volunteer work for the State Police to investigate cold cases. 1,000 hours of volunteer work on cold cases are required to qualify for this credit in full. Effective for tax years on or after January 1, 2022.

Act 875 amends the Water Resource Conservation and Development Incentives Act by increasing the maximum amount of credits allowed per project, the maximum amount of credits that may be used in a given taxable year, and the annual cap on the amount of credits allowed. Effective for tax years on or after January 1, 2021.

Act 895 extends and expands the qualified steel specialty products manufacturing facility provisions in the recycling equipment tax credit. Effective for tax years beginning on or after January 1, 2021.

Act 904 creates a school choice tax credit program. It provides a tax credit for contributions made to a sponsor-granting organization under the Philanthropic Investment in Arkansas Kids Program benefitting low-income students. The tax credit is capped at $2,000,000 annually.

Act 911 extends the time InvestArk project costs are eligible for retention tax credits to six (6) years from the date the financial incentive agreement is approved under certain narrow circumstances.

Act 935, Paisley’s Law, establishes a tax credit of $500 for a stillborn child. Effective for tax years beginning on or after January 1, 2021.

Act 967 establishes a tax credit for 50% of a taxpayer’s expenditures made for railroad maintenance; capped at a $5,000 times total track mileage. The credit can offset up to 100% of income, it has a five-year carryforward, and it is transferrable. Effective for tax years beginning on or after January 1, 2021.


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