Department of Finance and Administration
Legislative Impact Statement
Bill: HB1779
Bill Subtitle: TO AMEND THE WOOD ENERGY PRODUCTS AND FOREST MAINTENANCE
INCOME TAX CREDIT; AND TO ALLOW AN INCOME TAX CREDIT FOR WOOD ENERGY
PRODUCTS AND FOREST MAINTENANCE EXPANSION PROJECTS.
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Basic Change :
Sponsors: Rep. Wardlaw and Sen. Gilmore
HB1779 amends various provisions of the Arkansas Wood Energy Products and Forest Maintenance
Income Tax Credit. Act 594 of 2021 created the Logging and Wood Fiber Transportation Job Creation
Incentive Act (the Act). The Act provides an income tax credit for wood energy product and forest
maintenance projects. The credit is equal to 30% of the purchase price of qualifying equipment with a
required minimum investment of $50,000,000 for the project. Up to $5,000,000 of the credits may be
redeemed each year. The credits will carry forward in perpetuity until used and the credits may be sold
by the taxpayer.
To qualify for the credit, the taxpayer must apply with the Arkansas Economic Development
Commission (AEDC), demonstrate the minimum $50,000,000 investment, and sign an economic
incentive agreement. The taxpayer is also required to create at least 100 new full-time permanent jobs
with an average salary of $60,000 per year. The project must also show a positive economic benefit
based on an evaluation by AEDC and the DFA Office of Economic Analysis and Tax Research.
Under Act 594, a qualifying project was required to have a certified closing date by December 31,
2023. HB1779 adds to the Act a definition of "qualified wood energy products and forest maintenance
expansion project." Under the new definition, the project would qualify for the credit if the project was
certified to have commenced construction by January 1, 2023 with a closing date by December 31,
2025. HB1779 makes other corresponding changes to integrate the new definition into the Act.
HB1779 is effective for tax years beginning on and after January 1, 2023.
Revenue Impact :
Wood Energy Products and Forest Maintenance income tax credits are available up to $5,000,000 per
project. The State of Arkansas may elect to purchase the tax credits at 80% face value. A purchase of
tax credits would reduce general revenues up to $4,000,000 per project per year. No tax credits would
be issued to a taxpayer unless the project is determined to have a positive cost benefit analysis as
certified by AEDC in consultation with DFA and an incentive agreement with specified performance
criteria and claw back provisions is signed by the taxpayer and AEDC.
Taxpayer Impact :
A taxpayer will be able to qualify for the tax credit by expanding an existing qualified wood energy
products and forest maintenance expansion facility.
Resources Required :
Computer programs, tax forms, and instructions will need to be updated. The Arkansas Integrated
Revenue System (AIRS) will require programming at an estimated cost of $8,000.
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 Department of Finance and Administration
Legislative Impact Statement
Bill: HB1779
Bill Subtitle: TO AMEND THE WOOD ENERGY PRODUCTS AND FOREST MAINTENANCE
INCOME TAX CREDIT; AND TO ALLOW AN INCOME TAX CREDIT FOR WOOD ENERGY
PRODUCTS AND FOREST MAINTENANCE EXPANSION PROJECTS.
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Time Required :
Adequate time is provided for implementation.
Procedural Changes :
The Arkansas Economic Development Commission, the Office of Economic Analysis and Tax
Research, and Department of Finance and Administration employees will need to be educated as well
as the tax community.
Other Comments :
None.
Legal Analysis :
None.
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Statutes affected:
HB 1779: 19-6-301, 26-51-2703(2), 26-51-2703(3), 26-51-2703(5), 26-51-2703, 26-51-2704(a), 26-51-2704(b)
Act 845: 19-6-301, 26-51-2703(2), 26-51-2703(3), 26-51-2703(5), 26-51-2703, 26-51-2704(a), 26-51-2704(b)