The Remote and Mobile Work Modernization and Competitiveness Act aims to amend Arkansas's income tax laws to better accommodate remote and mobile employees, particularly nonresidents. The bill introduces several key provisions, including exemptions from income tax for certain remote and mobile employees earning $2,500 or less while working in the state, and it relieves employers from the obligation to withhold income tax from these employees under specific conditions. Additionally, the Department of Finance and Administration is authorized to enter into reciprocity agreements with other states to exempt residents of those states from Arkansas income tax if their state offers similar exemptions for Arkansas residents.

The legislation also modifies existing withholding requirements, stating that employers are not liable for failing to withhold income tax from employees who work in multiple states, provided they maintain a time and attendance system to track employee work locations. The act emphasizes the growing trend of remote work and the need for a more hospitable tax environment to attract and retain remote workers. The provisions of the act will take effect for tax years beginning on or after January 1, 2026.

Statutes affected:
HB 1116: 26-51-202