The Grocery Tax Relief Act seeks to amend Arkansas tax law by exempting food and food ingredients from state sales and use taxes. The bill specifies that the gross receipts from the sale of these items will not be subject to state taxes, while still permitting municipalities and counties to impose their own taxes under the Arkansas Gross Receipts Act and the Arkansas Compensating Tax Act. It also includes conforming changes to existing tax laws to align with this new exemption, while repealing certain sections related to the taxation of food and food ingredients. Notably, the bill removes the requirement for the Secretary of the Department of Finance and Administration to determine conditions for levying taxes on food and clarifies definitions related to food and prepared food.

Additionally, the bill amends 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, while excluding used motor vehicles, trailers, and semitrailers. It introduces an additional excise tax of one percent (1%) and two additional taxes of one-half of one percent (0.5%) and seven-eighths of one percent (0.875%) on the same categories of goods and services, also excluding the aforementioned vehicles. The bill modifies provisions related to food and food ingredients, stating they are subject to taxation under various local government acts, and eliminates the previous requirement for the Secretary to determine tax collection conditions from sellers without physical presence in Arkansas. The new provisions are set to take effect on January 1, 2026.

Statutes affected:
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)
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)
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)