SPOTLIGHT PROGRAMS

Advantage Arkansas (Income Tax Credit): This program provides corporate income tax credits to businesses that create new full-time jobs whose average hourly wage exceeds the county average hourly wage or $14.94 per hour, whichever is greater. An annual award of up to 4% of new employee payroll may be claimed for 5 years. The percentage of the available credit (1% to 4%) is based on the tier level of the county where the project is located. Qualified businesses may receive an additional tax credit of 1% of payroll if the new employees’ average hourly wage exceeds 125% of the lesser of the state or county average wage.  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 eligible 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.

Technology-based companies investing at least $250,000 and that pay at least 150% of the lesser of state or county’s average wage, may be eligible for an income tax credit or sales tax credit equal to 2-8% of capital investment. Subject to the average hourly wage paid by the company, the credits earned may be used to offset 50%, 75%, or 100% of the tax liability. Any unused credits may be carried forward for nine (9) years.

‍

‍

‍

TAX CREDITS

Research and Development Tax Credits (Various Programs):

• In-House Research in Area of Strategic Value Income Tax Credit: Businesses that conduct in house research that are either in the area of strategic value or in area offered by one of the programs by Arkansas -Economic Development Commission; may be eligible for an income tax credit equal to 33% of qualified R&D expenditures up to $50,000. The tax credit may be claimed for qualified expenses incurred in the first five years of the agreement. Unused tax credits may be carried forward for 9 years.
  ‍
• In-House Research by Targeted Business Income Tax Credit: Businesses that quality as a targeted industry may be eligible for an income tax credit equal to 33% of qualified in-house R&D expenditures that were incurred in the first five years of the agreement. Tax credits may be sold one time; any unused credits can be carried forward for 9 years.
  ‍
• In-House Research Income Tax Credit: Businesses conducting in-house research that also qualifies for federal R&D tax credits may qualify for an income tax credit up to 20% of the incremental amount spent on qualified R&D expenses that exceed the baseline established in the preceding year, for a period of five (5) years. The income tax credit may be used to offset 100% of an eligible business's annual income tax liability. Unused credits may be carried forward for 9 years.

‍

Equity Investment Incentive Program (Income Tax Credit): Discretionary incentive for equity investment in targeted, early-stage, and start-up businesses. A purchaser of equity interest in an eligible business may receive a tax credit of 33 ¹/₃% of the approved amount invested. The credit can offset up to 50% of income tax liability and be carried forward for 9 years. The credit may be sold upon approval by AEDC.

‍

‍

TAX EXEMPTIONS/REFUNDS

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

‍

Tax Back (Sales and Use Tax Refund): Businesses that make a minimum investment (based on which incentive Tier county the project is located in), and either sign a job creation agreement within the first 24 months or have signed an Advantage Arkansas or Credit Rebate agreement within the last 48 months, may receive a refund on sales and use tax associated with the purchase of building materials and machinery and equipment. The business must meet the eligibility requirements of either Advantage Arkansas or Create Rebate program in which they participate.

‍

Replacement and Repair of Manufacturing Machinery and Equipment Sales and Use Tax Refund: A qualified business may receive a refund on certain sales and use taxes (5.875%) relating to the partial replacement and repair of machinery and equipment used directly in manufacturing through two options:

• Option 1: Provides a refund of 1% of the 5.875% sales and taxes against certain machinery and equipment used directly in the manufacturing process.
  ‍
• Option 2: Provides for an increased refund of all sales and use taxes (5.875%) at the discretion of AEDC to a taxpayer who undertakes a major maintenance and improvement project to purchase and install certain machinery and equipment.

‍

‍

DIRECT FINANCIAL ASSISTANCE

Create Rebate (Cash Rebate): Under this discretionary program, businesses that create new full-time jobs with a minimum aggregate, annual payroll of $2,000,000 within 24 months may qualify for annual cash payments for up to 10 years. The average hourly wage paid to employees whose payroll is subject to the incentive must be equal to or greater than the county average hourly wage or $14.94. 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.

Qualified technology-based companies with a minimum annual payroll of $250,000 paying at least 175% of the lesser of state or county’s average wage may be eligible for a rebate equal to 5% of annual payroll for new employees for up to 10 years.

‍

‍Governor’s Quick Action Closing Fund: The Governor’s Quick Action Closing Fund is an incentive the State of Arkansas reserves for projects that bring quality jobs to communities. AEDC would use discretion in offering assistance for project expenses pertaining to locating a company.  Terms and conditions, including claw-backs and eligible expenses, would be provided on a separate agreement document if a company makes the decision to locate in Arkansas.‍

‍

Amendment 82 Bond Financing: The Arkansas General Assembly has the power to issue bonds to attract large economic development projects to the state. These bonds can be used for activities such as land acquisition, site prep, rail spur construction, water service, employee training, and others.

‍

‍

‍

JOB TRAINING

Tuition Reimbursement: Arkansas provides a 30% state income tax credit to eligible companies that make reimbursement payments on behalf of their employees for approved education expenses. Employees must have completed the course at an accredited Arkansas post-secondary institution.

‍

‍

‍

Last Updated: May 2023