The "Grocery Tax Relief Act" proposes to amend Arkansas tax law by exempting food and food ingredients from state sales and use taxes, while still allowing municipalities and counties to impose taxes under the Arkansas Gross Receipts Act of 1941 and the Arkansas Compensating Tax Act of 1949. The bill includes the repeal of certain provisions related to the taxation of food and food ingredients and introduces new definitions to clarify that prepared food is excluded from this exemption. Additionally, it outlines the responsibilities of the Secretary of the Department of Finance and Administration for implementing these changes, aiming to provide financial relief to consumers on essential food items.

The legislation also modifies existing tax codes concerning the taxation of tangible personal property, digital products, and services, introducing an excise tax of one percent (1%) along with additional rates of one-half of one percent (0.5%) and seven-eighths of one percent (0.875%). It explicitly excludes used motor vehicles, trailers, and semitrailers from these taxes and clarifies that food and food ingredients will not be subject to the new excise taxes. The bill establishes that municipal and county use taxes will apply to the sales price of food and food ingredients, with the new provisions set to take effect on January 1, 2026.

Statutes affected:
SB 377: 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)