The "Keep the Bonus, Axe the Tax: The No-Tax Bonus Act" aims to exempt bonuses from income tax in Arkansas. The bill defines a "bonus" as a nonrecurring payment made to an employee that is in addition to regular or overtime wages, does not affect the employee's base pay, and does not imply future payments. Under the new provisions, bonuses will be exempt from the income tax levied under Arkansas law.

The act includes a specific effective date, stating that the exemption will apply to tax years beginning on or after January 1, 2026. This legislation seeks to provide financial relief to employees receiving bonuses by ensuring that these payments are not subject to state income tax.