Department of Finance and Administration
Legislative Impact Statement
Bill: HJR1007
Bill Subtitle: A CONSTITUTIONAL AMENDMENT TO LEVY AN EXCISE TAX ON CERTAIN
TAXABLE SALES TO REIMBURSE COUNTIES FOR THE HOMESTEAD PROPERTY TAX CREDIT
AND ADMINISTER THE APPLICATION OF THE HOMESTEAD PROPERTY TAX CREDIT.
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Basic Change :
Sponsors: Rep. L. Fite and Sen. K. Hammer
HJR1007 proposes a constitutional amendment to levy an additional 0.50% excise tax on sales of
tangible personal property, specified digital products, and enumerated services as a special revenue
levy to reimburse counties for the tax revenue reduction resulting from the homestead property tax
credit and for administering the credit. The additional 0.50% excise tax would not apply to the sale of
food and food ingredients or used motor vehicles, trailers, and semitrailers.
The new levy would be in addition to the existing 0.50% excise tax that is special revenue that is
deposited in the Property Tax Relief Trust Fund used to reimburse counties for the homestead property
tax credit.
If approved by voters, the amendment would be effective on and after January 1, 2025.
Revenue Impact :
FY2025
Total Approximate State Sales and Use Tax Increase to be directed
to offset the tax revenue loss from the Homestead Property Tax Credit $ 142.4 Million
State Central Services Increase - $ 3.1 Million
Constitutional Officers Increase - $ 1.5 Million
FY2026
Total Approximate State Sales and Use Tax Increase to be directed
to offset the tax revenue loss from the Homestead Property Tax Credit $ 348.1 Million
State Central Services Increase - $ 7.5 Million
Constitutional Officers Increase - $ 3.6 Million
Taxpayer Impact :
A taxpayer’s purchases of tangible personal property, specified digital products, a digital code, and
services will be subject to an additional 0.50% sales and use tax. The additional tax would not be
levied upon purchases of food and food ingredients or used motor vehicles, trailers, and semitrailers.
Resources Required :
The Arkansas Integrated Revenue System (AIRS) system will need to be programmed to
accommodate this change. Requirements gathering, development, testing, and training will take
approximately 240 hours at a cost of $48,000. This would also require recurring maintenance at a cost
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 Department of Finance and Administration
Legislative Impact Statement
Bill: HJR1007
Bill Subtitle: A CONSTITUTIONAL AMENDMENT TO LEVY AN EXCISE TAX ON CERTAIN
TAXABLE SALES TO REIMBURSE COUNTIES FOR THE HOMESTEAD PROPERTY TAX CREDIT
AND ADMINISTER THE APPLICATION OF THE HOMESTEAD PROPERTY TAX CREDIT.
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of $2,000 annually.
Time Required :
Adequate time is provided for implementation.
Procedural Changes :
Updates to the sales tax rules will be promulgated. Modifications to the States tax database and Office
of Motor Vehicle registration systems will be required.
Other Comments :
HJR1007 provides that the funds shall be designated to reimburse counties for the tax revenue
reduction as a result of the homestead property tax credit and to administer the credit. HJR1007 does
not identify the fund in which the collections will be deposited.
Legal Analysis :
In the November 2000 general election, voters approved Arkansas Constitutional Amendment 79 to
provide property tax relief. In response, the Arkansas General Assembly increased the Arkansas sales
and use tax by 0.5% effective January 1, 2001. The revenues from this 0.5% sales and use tax are
special revenues credited to the Property Tax Relief Trust Fund.
In addition, the General Assembly established the homestead property tax credit at $300 per
homestead. That amount was subsequently raised to $375 per homestead. A homeowner may qualify
for the tax credit for his or her principal place of residence and land contiguous thereto. Each county
assessor is responsible for identifying the parcels of real property eligible for the credit within their
county and reflecting the $375 credit on the tax bill sent to the property owner by the county collector.
Act 315 of 2023 raised the credit to $425, effective for assessment years beginning on and after
January 1, 2023.
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