The "Keep the Bonus, Axe the Tax: The No-Tax Bonus Act" is a legislative proposal aimed at exempting bonuses from income tax in the state of Arkansas. The bill defines a "bonus" as a nonrecurring payment made to an employee that is in addition to their regular or overtime wages, does not affect their base pay, and does not imply any future payment commitments. The new section added to the Arkansas Code specifies that such bonuses will not be subject to the income tax currently levied under the relevant chapter.

Additionally, the bill includes a provision that states it will take effect for tax years beginning on or after January 1, 2026. This act is intended to provide financial relief to employees receiving bonuses by ensuring that these payments are not taxed, thereby allowing them to retain the full amount of their bonus.