The proposed "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. Key provisions include exemptions from income tax for certain remote and mobile employees earning $2,500 or less while working in the state, as well as exemptions for employers from withholding income tax for employees who work in multiple states or for 15 days or fewer in Arkansas. The bill also allows the Department of Finance and Administration 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.

Additionally, the bill introduces a framework for employers regarding their liability for withholding taxes, stating that they will not be penalized for failing to withhold if they maintain a time and attendance system to track employee work locations or if they rely on reasonable determinations of employee work time. The act emphasizes the need for a more hospitable tax code to attract remote workers, reflecting the growing trend of remote and hybrid work arrangements. The provisions of the act are set to take effect for tax years beginning on or after January 1, 2026.

Statutes affected:
Old version HB1116 V2 - 3-13-2025 09:45 AM: 26-51-202
Old version HB1116 Original - 1-14-2025 09:28 AM: 26-51-202
HB 1116: 26-51-202