Department of Finance and Administration
Legislative Impact Statement
Bill: SB257
Bill Subtitle: TO CREATE THE ACCESS TO CREDIT FOR OUR RURAL ECONOMY (ACRE) ACT;
AND TO PROVIDE AN INCOME TAX DEDUCTION FOR CERTAIN AGRICULTURAL LOANS.
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Basic Change :
Sponsors: Sen. B. Johnson and Rep. Beaty Jr.
SB257 creates the "Access to Credit for Our Rural Economy (ACRE) Act" to be codified at §
26-51-462. The ACRE Act provides an income tax deduction for the net interest income received from
a qualified agricultural loan that is received by an eligible lending institution.
A "qualified agricultural loan" is a loan that:
 Is made on personal property used for an agricultural purpose, including without limitation
equipment and machinery, livestock, and crops; or
 Is made on real property that is substantially used for the production of one or more agricultural
products, is secured by a first or second lien interest in real property, and has an outstanding loan
balance that is either less than 85% of the appraised value of the real estate or more than 85% of
the appraised value of the real estate if the loan balance in excess of 85% is insured by private
mortgage insurance.
"Net interest income received from qualified agricultural loans" means the product of the ratio of the
income earned on qualified agricultural loans over total interest income earned, in relation to the
adjusted gross income of the eligible lending institution without regard to the deduction allowed under
the bill.
"Eligible lending institution" is defined as a:
 National banking association;
 State bank and a registered out-of-state bank, as those terms are defined in § 23-45-102;
 State trust company, as defined in § 23-51-102; or
 Federal savings bank.
SB257 is effective for tax years beginning on or after January 1, 2024.
Revenue Impact :
FY2024 - $4.25 million General Revenue Reduction
FY2025 - $8.5 million General Revenue Reduction
Taxpayer Impact :
An eligible lending institution will be able to deduct net interest income received from qualified
agricultural loans from net income.
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 Department of Finance and Administration
Legislative Impact Statement
Bill: SB257
Bill Subtitle: TO CREATE THE ACCESS TO CREDIT FOR OUR RURAL ECONOMY (ACRE) ACT;
AND TO PROVIDE AN INCOME TAX DEDUCTION FOR CERTAIN AGRICULTURAL LOANS.
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Resources Required :
Computer programs, tax forms, and instructions will need to be updated. The Arkansas Integrated
Revenue System (AIRS) will require programming at an estimated cost of $8,000.00.
Time Required :
Adequate time is provided for implementation.
Procedural Changes :
Department employees will need to be educated as well as the tax community.
Other Comments :
None.
Legal Analysis :
None.
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