The proposed bill amends the Consolidated Incentive Act of 2003 to introduce a new income tax credit designed to attract corporations to relocate their headquarters to Arkansas. It empowers the Director of the Arkansas Economic Development Commission to offer a tax credit of up to 50% of the payroll for new full-time permanent employees linked to the relocated headquarters, contingent upon the creation of a specified number of new jobs and adherence to wage thresholds that vary by county tier. The bill also outlines the annual certification process for businesses to validate their payroll and employee numbers to qualify for these tax credits.

Additionally, the bill revises existing provisions related to investment tax incentives, allowing businesses to opt for either income tax credits or sales and use tax credits, and establishes a tiered structure for investment thresholds and payroll requirements based on county classification. It introduces a ten-percent reduction of the earned tax credit if not claimed within twelve months and a one-hundred-percent forfeiture if not claimed within twenty-four months. The bill also mandates the termination of financial incentive agreements if initial payroll figures are not certified within four years, with provisions for extensions under certain conditions. Furthermore, it clarifies the restrictions on combining incentives, removing specific combinations previously allowed while permitting the sales and use tax refund program to be combined with various other tax credits. The changes are set to take effect for tax years beginning on or after January 1, 2026.

Statutes affected:
HB 1922: 15-4-2706(b), 15-4-2706, 15-4-2711(g), 15-4-2711, 15-4-2712(b)