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Arkansas Direct Financial Incentives 2011

Arkansas' economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include industrial revenue bonds, industrial revenue bond guarantees, and a Community Development Block Grant Program.

March 2011
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Recycling equipment tax credit:
A tax credit is available for the purchase of equipment used exclusively for reduction, reuse, or recycling of solid-waste material for commercial purposes, whether or not for profit, and the cost of installation of such equipment by outside contractors. Ten percent of the recycled solid waste must be post-consumer content. The tax credit shall equal 30 percent of the cost of eligible equipment and installation costs. Credits may be carried over a maximum of three consecutive years following the taxable year in which the credits accrued.

Tourism development credit:
The Arkansas Tourism Development Act provides state sales tax credits and income tax credits to eligible businesses initiating approved tourist attraction projects with a minimum project cost of $500,000 in high-unemployment counties and $1 million in any other county.

The sales tax credits of the approved cost depend on the amount of investment. The credit earned may only be used to offset the increased tax liability incurred as a result of the project. Any unused credit may be carried forward for a period of 9 years.

The income tax credit provided by this program is equal to four percent of the payroll of the new, full-time, permanent employees of the approved tourism project. The credit may be applied against the tax liability for the tax year the credit was earned. Any unused credit may be carried forward 9 years. Other review criteria may be requested by the Arkansas Economic Development Commission (AEDC) to determine whether the tourism-attraction project will further the purposes of the act.

Tuition Reimbursement Act:
The Tuition Reimbursement Act provides a 30 percent income tax credit to eligible businesses for the costs they incur in reimbursing employees for tuition, books and fees for training or courses at accredited Arkansas postsecondary educational institutions to improve job skills. A business' tax credit cannot offset more than 25 percent of its income tax liability in any year. An employee must be a permanent full-time employee to qualify.

Eligible businesses include manufacturers classified in SIC codes 20-39, or eligible computer businesses with no retail public sales that derive at least 60 percent of their revenue from out-of-state sales; or businesses primarily engaged in commercial physical and biological research as classified by SIC code 8731; or businesses primarily engaged in motion-picture production with no retail public sales that derive at least 60 percent of their revenue from out-of-state sales; or distribution centers, office-sector businesses, trucking/distribution terminals as classified by SIC code 4231; or corporate or regional headquarters with no retail public sales.

Workers' compensation:
Arkansas has one of the most progressive workers' compensation programs in the nation, with nearly 300 certified insurance underwriters. Rates have dropped approximately 35 percent since the 1993 passage of the Worker's Compensation Reform Act.

Arkansas Public Roads Improvement Credit Act:
This act provides an income tax credit up to 33 percent to any individual, fiduciary or corporation subject to Arkansas income tax that contributes to the Public Roads Incentive Fund. Each taxpayer that contributes to the fund may make a general contribution or designate a project for which the contribution is earmarked. The credit claimed in any year shall not exceed 50 percent of the taxpayer's net Arkansas income tax liability after all credits and reductions have been applied.

Small Business Loan Program:
This program stimulates small business by providing up to one-half the amount of participation loans referred by approved community lenders. A small business is one with fewer than 50 full-time employees and less than $1 million in annual gross sales, excluding agricultural production. AEDC's share cannot exceed 50 percent of the total loan amount, and cannot be less than $2,500 or more than $40,000. The business must provide the lender with a sound business plan, proof of creditworthiness, collateral, and a demonstrated need. Proceeds may be used to purchase machinery and equipment, to stabilize working capital, and/or to purchase, construct or renovate commercial real estate.

Arkansas State Contact:
Arkansas Economic Development Commission
900 W. Capitol Avenue
Little Rock, AR 72201
(501) 682-1121

Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.