The "Grocery Tax Relief Act" proposes significant amendments to Arkansas tax law by exempting food and food ingredients from state sales and use taxes. While these items will no longer be subject to state taxes, municipalities and counties will still be able to impose their own taxes under the Arkansas Gross Receipts Act and the Arkansas Compensating Tax Act. The bill includes the deletion of specific tax provisions that previously applied to food and food ingredients and introduces new definitions and regulations to clarify what constitutes these items. It also establishes that gross receipts from the sale of food and food ingredients are exempt from both the gross receipts tax and the compensating use tax.

In addition to the grocery tax exemptions, the bill amends the taxation of tangible personal property, specified digital products, digital codes, and taxable services by introducing a series of excise taxes while explicitly excluding used motor vehicles, trailers, and semitrailers. The legislation clarifies that municipal and county use taxes will apply to the sales price of food and food ingredients, and it sets an effective date for these new provisions to take effect on January 1, 2026. Overall, the Grocery Tax Relief Act aims to reduce the tax burden on consumers purchasing food while ensuring local governments retain the ability to impose taxes on these sales.

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)