TAX CREDITS

Advantage Arkansas (Income Tax Credit): This program provides corporate income tax credits to businesses that create new full-time jobs.  An annual credit of up to 4% of new employee payroll may be claimed for 5 years. The percentage of the available credit (1% to 4%) and average hourly wage needed to qualify for the incentive is based on the tier level of the county where the project is located.    In any year, tax credits claimed under this program cannot exceed 50% of a company’s tax liability.  Unused credits may be carried forward for 9 years.

ArkPlus (Income Tax Credit):  State corporate income tax credits equal to 10% of the total investment in a business attraction or expansion project may be awarded to companies that meet certain investment and employee payroll requirements.  The minimum investment and employee payroll thresholds will depend on the tier level of the county where the project is located.  In any year, tax credits claimed under this discretionary program cannot exceed 50% of a company’s tax liability.  Unused credits may be carried forward for 9 years.

InvestArk (Sales and Use Tax Credit): A company that has operated a business facility in Arkansas for at least two years and invests $5 million or more in capital improvements may receive a credit against its state direct-pay sales and use tax liability.  The non-refundable and non-transferable tax credit is equal to 7% of eligible project expenditures.  In any year, tax credits claimed under InvestArk cannot exceed 50% of a company’s sales and use tax liability on taxable purchases.  Unused credits may be carried forward up to 5 years.

Research and Development Tax Credits (Various Programs): Arkansas offers several R&D tax credit programs. A credit equal to 33% of research expenditures is available for certain qualified businesses that perform in-house research, research in strategic areas, or contract with Arkansas colleges and universities to perform research.  Companies that do not meet the qualifications of a “targeted business” may receive a tax credit equal to 20% of qualified research expenditures that exceed the base year, for a period of 3 years and the incremental increase in qualified research and expenditures for the succeeding two years.  R&D tax credits may be used to offset up to 100% of a business tax liability in a given year. Unused credits may be carried forward for 9 years.

GRANTS/LOANS

Create Rebate (Cash Rebate): Businesses that create new full-time jobs with a minimum annual payroll of $2,000,000 may qualify for annual cash payments under this discretionary program. The minimum payroll must be met within 24 months of the effective date of the incentive agreement. The percentage of the benefit (3.9% to 5.0% of annual payroll) is based on the tier level of the county where the project is located.

JOB TRAINING

Business and Industry Training Program (BITP): Helps new and expanding businesses with recruiting workers, pre-employment training, on-the-job training and train-the-trainer programs.  The BITP program also provides training assistance for existing businesses with new technology needs.

TAX REFUNDS

Tax Back (Sales and Use Tax Refund):  Businesses that create new jobs and make a minimum capital investment of $100,000 may receive a refund on sales and use tax associated with the purchase of building materials and machinery and equipment.

TAX EXEMPTIONS

Machinery and equipment used directly in manufacturing is exempt from sales and use tax.

 

Last updated: May 2016

 


 
BIGGINS LACY SHAPIRO & COMPANY
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