The Grocery Tax Relief Act seeks to amend Arkansas tax law by exempting food and food ingredients from state sales and use taxes, while still permitting local municipalities and counties to impose their own taxes. The bill clarifies that prepared food will not be included in this exemption and makes conforming changes to existing tax laws. It also removes specific percentages related to taxes on food from the Property Tax Relief Trust Fund and the Educational Adequacy Fund, as well as repealing sections that previously outlined tax rates on food sales. The intent of the legislation is to provide tax relief for grocery purchases while allowing local governments to maintain their taxing authority.

Additionally, the bill modifies the Arkansas Compensating Tax Act of 1949 by establishing a three percent (3%) tax on the sales price of tangible personal property, specified digital products, digital codes, and taxable services, excluding used motor vehicles, trailers, and semitrailers. It introduces an additional excise tax of one percent (1%) and a further one-half of one percent (0.5%) on the same categories of goods and services, while removing previous exemptions for food and food ingredients. The new tax provisions are set to take effect on January 1, 2026, with the aim of streamlining tax collection and increasing state revenue from compensating use taxes.

Statutes affected:
Old version HB1685 Original - 3-5-2025 09:44 AM: 19-5-1103(b), 19-5-1227(b), 19-6-201(58), 19-6-201(60), 26-52-301, 26-52-302, 26-52-317, 26-52-324, 26-52-103, 6-62-701, 6-62-1101, 15-20-1301, 26-52-323, 26-53-102, 26-52-101, 26-53-101, 25-15-201, 26-18-201, 26-18-202, 26-18-208, 26-18-209, 26-52-512, 26-53-125, 26-53-145, 26-53-106, 26-53-107, 26-53-106(a)
Old version HB1685 V2 - 3-17-2025 12:39 PM: 19-5-1103(b), 19-5-1227(b), 19-6-201(58), 19-6-201(60), 26-52-301, 26-52-302, 26-52-317, 26-52-324, 26-52-103, 03-17-2025, 6-62-701, 6-62-1101, 15-20-1301, 26-73-113, 26-74-201, 26-74-301, 26-75-201, 26-75-301, 26-52-323, 26-53-102, 26-52-101, 26-53-101, 25-15-201, 26-18-201, 26-18-202, 26-18-208, 26-18-209, 26-52-512, 26-53-125, 26-53-145, 26-53-106, 26-53-107, 26-53-106(a)
Old version HB1685 V3 - 4-1-2025 10:07 AM: 19-5-1103(b), 19-5-1227(b), 19-6-201(58), 19-6-201(60), 26-52-301, 26-52-302, 26-52-317, 26-52-324, 26-52-103, 04-01-2025, 6-62-701, 6-62-1101, 15-20-1301, 26-73-110, 26-73-113, 26-74-201, 26-74-301, 26-74-401, 26-74-601, 26-75-201, 26-75-401, 26-75-501, 26-81-101, 26-82-101, 26-52-323, 26-53-102, 26-52-101, 26-53-101, 25-15-201, 26-18-201, 26-18-202, 26-18-208, 26-18-209, 26-52-512, 26-53-125, 26-53-145, 26-53-106, 26-53-107, 26-53-106(a)
Old version HB1685 V4 - 4-8-2025 02:21 PM: 19-5-1103(b), 19-5-1227(b), 19-6-201(58), 19-6-201(60), 26-52-301, 26-52-302, 26-52-317, 26-52-324, 26-52-103, 04-08-2025, 6-62-701, 6-62-1101, 15-20-1301, 26-73-110, 26-73-113, 26-74-201, 26-74-301, 26-74-401, 26-74-601, 26-75-201, 26-75-401, 26-75-501, 26-81-101, 26-82-101, 26-52-323, 26-53-102, 26-52-101, 26-53-101, 25-15-201, 26-18-201, 26-18-202, 26-18-208, 26-18-209, 26-52-512, 26-53-125, 26-53-145, 26-53-106, 26-53-107, 26-53-106(a)
Old version HB1685 V5 - 4-9-2025 06:12 PM: 19-5-1103(b), 19-5-1227(b), 19-6-201(58), 19-6-201(60), 26-52-301, 26-52-302, 26-52-317, 26-52-324, 26-52-103, 04-09-2025, 6-62-701, 6-62-1101, 15-20-1301, 26-52-303, 26-52-606, 26-52-607, 26-73-110, 26-74-201, 26-74-301, 26-74-401, 26-75-201, 26-75-301, 26-75-401, 26-75-501, 26-82-101, 26-52-323, 26-53-102, 26-52-101, 26-53-101, 25-15-201, 26-18-201, 26-18-202, 26-18-208, 26-18-209, 26-52-512, 26-53-125, 26-53-145, 26-53-106, 26-53-107, 26-53-106(a)
HB 1685: 19-5-1103(b), 19-5-1227(b), 19-6-201(58), 19-6-201(60), 26-52-301, 26-52-302, 26-52-317, 26-52-324, 26-52-103, 6-62-701, 6-62-1101, 15-20-1301, 26-52-323, 26-53-102, 26-52-101, 26-53-101, 25-15-201, 26-18-201, 26-18-202, 26-18-208, 26-18-209, 26-52-512, 26-53-125, 26-53-145, 26-53-106, 26-53-107, 26-53-106(a)
Act 1008: 19-5-1103(b), 19-5-1227(b), 19-6-201(58), 19-6-201(60), 26-52-301, 26-52-302, 26-52-317, 26-52-324, 26-52-103, 04-09-2025, 6-62-701, 6-62-1101, 15-20-1301, 26-52-303, 26-52-606, 26-52-607, 26-73-110, 26-74-201, 26-74-301, 26-74-401, 26-75-201, 26-75-301, 26-75-401, 26-75-501, 26-82-101, 26-52-323, 26-53-102, 26-52-101, 26-53-101, 25-15-201, 26-18-201, 26-18-202, 26-18-208, 26-18-209, 26-52-512, 26-53-125, 26-53-145, 26-53-106, 26-53-107, 26-53-106(a)