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 fifty percent (50%) of the payroll for new full-time permanent employees linked to the relocating headquarters, contingent upon the creation of a specified number of new jobs and adherence to wage thresholds based on the county tier. A positive cost-benefit analysis is required before any financial incentive agreement can be granted. Additionally, the bill revises existing investment tax incentive provisions, allowing for both income tax and sales and use tax credits, with businesses required to certify their payroll and employee numbers annually.

The bill also introduces several amendments to the existing regulations, including a ten-percent reduction of the earned tax credit if not claimed within twelve months and a complete forfeiture if not claimed within twenty-four months after the tax year in which the credit was earned. It mandates the termination of financial incentive agreements if initial payroll figures are not certified within four years unless an extension is granted. Furthermore, the bill clarifies the restrictions on combining certain incentives, removing previously allowed combinations while specifying which incentives can still be combined. 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)
Act 881: 15-4-2706(b), 15-4-2706, 15-4-2711(g), 15-4-2711, 15-4-2712(b)