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 home state offers similar exemptions for Arkansas residents.

The legislation also modifies existing withholding requirements, stating that employers are not liable for failing to withhold taxes from employees who work in multiple states if they maintain a time and attendance system to track employee work locations. Furthermore, the bill emphasizes that employers will not face penalties for withholding failures if they can demonstrate reasonable cause for their actions. The provisions of this act will 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