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             ARKANSAS

                  2023

        Sub-Chapter S 

Corporation Income Tax 

              Instructions 

                                 th
Due Date:  On or before the 15  day of the 4th month following 
the close of the tax year, for calendar year filers the due date 
      th
is April 15 .

Simple Reasons to e-file!

Filing Confirmation Provided                         ArkansasArkansas
Makes Complex Returns Easy                                      
                                                     e e      filefile
     File Federal & State Forms Together
Secure

Mailing Address:                   Physical Address:
State of Arkansas                  Corporation Income Tax
Corporation Income Tax Section     1816 W 7th St, Room 2250
P.O. Box 919                       Ledbetter Building
Little Rock, Arkansas 72203-0919   Little Rock, AR  72201-1030

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TAX HELP AND FORMS

Internet ATAP

You can access the Department of Finance and Administration’s Arkansas Taxpayer Access Point (ATAP) allows taxpayers or
website at www.dfa.arkansas.gov. their representatives to log on to a secure site and manage
their account online.
 Get current and prior year forms and instructions
 Access latest income tax info and archived news Access ATAP at www.atap.arkansas.gov to:
 Get e-file information
 Make Tax Payments
You can e-mail questions to:  Make Estimated Tax Payments
corporate.income@dfa.arkansas.gov  Make name and address changes
 View account letters

(Registration is not required to make payments or to check
refund status.)

Phone


General Information .................................................(501) 682-4775

Mail
Representatives are available to assist callers at the number 
above during normal business hours (Monday through Friday Corporation Income Tax Section
from 8:00 a.m. to 4:30 p.m.) with: P. O. Box 919
Little Rock, AR 72203-0919
 Taxpayer Assistance  Notices Received
 Forms  Amended Returns Be sure to apply sufficient postage or your return will not be
 Audit and Examination  Payment Information delivered by the U.S. Postal Service.

Other useful phone numbers:
Tax Credits ...................................... (501) 682-7106
Withholding Tax .............................. (501) 682-7290
Collections ...................................... (501) 682-5000
Revenue Legal Counsel ................. (501) 682-7030 Walk-In
Individual Income Tax ..................... (501) 682-1100
Sales and Use Tax .......................... (501) 682-7104 Representatives are available to assist walk-in taxpayers
Problem Resolution and ................. (501) 682-7751 with corporate income tax questions, but are not available to
Tax Information Office (Offers In Compromise) prepare your return.
Internal Revenue Service ............... (800) 829-1040
Social Security Administration ........ (800) 772-1213 No appointment is necessary, but plan to arrive before 4:00
p.m. to allow sufficient time for assistance.

The Corporate Income Tax Office is located at:
1816 W. 7th Street, Room 2250
Ledbetter Building, Litte Rock, Arkansas 72201
Forms
Office hours are Monday through Friday from 8:00 a.m. to
To obtain a booklet or forms you may: 4:30 p.m.

1. Access our website at:
https://www.dfa.arkansas.gov/income-tax/corporation/corporation-forms/
2. Call: (501) 682-4775

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              CONTENTS
 Tax Help and Forms ............................................................................................................2
 
 What’s New for 2023 ...........................................................................................................4
 Important Reminders for 2023 ...........................................................................................5-7
 Instructions:
      Subchapter S Corporation Election and Instructions ....................................................8-9
 
      Filing as a Subchapter S Corporation ............................................................................9-11
 
      Specific Line Instructions, AR1100S Return .............................................................11-19 
 Financial Institutions  ..........................................................................................................20
 Business Incentive Tax Credits .....................................................................................21-28
 
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                WHAT’S NEW for 2023

NOTE: The following is a brief description of Acts affecting Arkansas Corporation Income Tax and is not 
intended to replace a careful reading of each Act in its entirety.

Tax rate and other important changes

ACT 658 of 2023 authorizes an organization operating a railroad partly within this state and partly outside this state 
to choose between two options in apportioning its net operating income attributable to this state and provides that 
any rules adopted by the Department of Finance and Administration that conflict with the act are void. The act is 
effective for tax years beginning on or after January 1, 2023

Act 532 of 2023 amends Arkansas Code Annotated 26-51-205 to reduce the maximum corporation income tax 
rate to 5.1% for all taxable income exceeding $25,000 for tax years beginning on or after January 1, 2023. The 
maximum income tax rate for corporations will remain 5.9% for all taxable income exceeding $25,000 for tax years 
beginning on or after January 1, 2022 and beginning before January 1, 2023.

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IMPORTANT REMINDERS for 2023
th
For tax years beginning on or after January 1, 2016, Arkansas has adopted the due date of April 15 for
calendar year filers.

Arkansas Code Annotated 26-51-427 allows net operating losses occurring in tax years beginning on or after
January 1, 2020 to carry forward for 8 tax years and losses occurring in tax years beginning on or after January
1, 2021 to carry forward 10 years. Net operating losses that occur in tax years beginning before January 1, 2020
carry forward 5 tax years.

Arkansas Code Annotated 26-51-428 was amended to adopt Title 26 U.S.C. Section 179, as in effect on January
1, 2022, for the purpose of computing Arkansas income tax liability for property purchased in tax years beginning
on or after January 1, 2022, for tax years beginning on or after January 1, 2022. The adoption of Internal Code
Section 179 will result in the Arkansas Section 179 deduction being raised from $25,000 per year to $1,080,000 for
tax years beginning in 2022 and for the dollar-for-dollar phaseout being raised from $200,000 to $2,700,000. The
lower limits will remain in place for years beginning prior to 2022, including any carryforward of Section 179 that
could not be claimed in earlier years. Please refer to the line item instructions for Depreciation and the instructions
for Form AR1100REC for further details.

Act 95 of 2020 created Arkansas Code Annotated 26-51-316 and exempts from Arkansas income tax payments
made to a taxpayer by the United States Department of Agriculture under the Market Facilitation Program authorized
by 15 U.S.C. §714c as it existed on January 1, 2020. Expenses for losses related to the receipt of a payment to a
taxpayer under the Market Facilitation Program are not deductible or otherwise permitted to offset any other income
from the tax year in which the loss or expenses are incurred. Act 95 of 2020 is effective for tax years beginning on
or after January 1, 2020.

Act 248 of 2021 amended Arkansas Code Annotated 26-51-404(b) to add the following exclusions from gross income;

1. Title 15 U.S.C. § 626A(i) as in effect on January 1, 2021 exempts sums received under the Paycheck
Protection Program of loan forgiveness as included in § 304(b), 276(a) and 276(b) of the Consolidated
Incentive Act of 2021, Public Law 116-260.
2. Section 277 of the Consolidated Appropriations Act concerning the tax treatment of certain emergency
financial aid grants to students.
3. Section 278 of the Consolidated Appropriations Act concerning the clarification of the tax treatment of
certain loan forgiveness and other business financial assistance. Section 278 includes exemptions for
Paycheck Protection Program loan forgiveness under section 1109(d)(2)(d) of the CARES Act, Economic
Injury Disaster Loan grants also known as EIDL Grants from the Small Business Administration under
section 1110(c) of the Cares Act and section 331 of the Hard-Hit Small Businesses, Nonprofits and
Venues Act, Subsidies for certain SBA loan payments described in Section 1112(c) of the Cares Act and
Grants for Shuttered Venue Operators under Section 324 of the Hard-Hit Small Businesses, Nonprofits
and Venues Act.
4. Payments received under the Coronavirus Food Assistance Program described in 7 C.F.R. Part 9 as
it existed on January 19, 2021.

Expenses related to the exclusion of income under Act 248 of 2021 are deductible. Income exempted under Act 248
of 2021 and Act 95 of 2020 must be added back in the calculation of net operating loss as required by Arkansas Code
Annotated 26-51-427(2). Act 248 also includes language that any successor programs to the PPP loan forgiveness
program will also be exempt and related expenses are also deductible. Therefore, any PPP loan forgiveness under
the ARPA Act will also be exempt from Arkansas income tax and related expenses will be allowed as deductions.

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There are a number of federal and state financial assistance programs that are not exempt from Arkansas income 
taxes. Among the assistance programs that are not exempt are several government assistance programs included 
in the American Rescue Plan Act (ARPA) such as;

1.  the Restaurant Revitalization Fund Grants, 
2.  Rural Health Care and Development Grants, 
3.  USDA Grants and Loan Subsidies, 
4.  EIDL Grants under ARPA, 
5.  Emergency Rental Assistance under ARPA and the Consolidated Appropriations Act,
6.  Aviation Manufacturing Job Protection Grants,
7.  Airline and Airline Contractor Extended Payroll Support Program, 
8.  Arkansas Ready for Business Grants and 
  9.  any other federal, state or local financial assistance program not specifically exempted by Arkansas 
       law.

DFA has recently clarified that several federal tax credits created by ARPA are not taxable income and that related 
expenses are deductible in Arkansas. These include the Employee Retention Credits and the Employer Tax Credits 
for Paid Sick and Family Leave.

Act 143 of 2021 amends Arkansas Code Annotated 26-51-102 to include a definition for tax practitioner and 
Arkansas Code Annotated 26-51-806 to require a tax practitioner who files federal income tax returns electronically 
to also file Arkansas returns electronically and allows DFA to waive the requirement if the requirement would cause 
an undue hardship on the practitioner.

Act 362 of 2021 creates A new Chapter 65 to Arkansas Code Title 26 and creates the Elective Pass-Through 
Entity Tax for tax years beginning on or after January 1, 2022. Act 362 allows members holding 50% or more of a 
pass-through entity to elect to have the pass-through entity pay Arkansas income taxes itself instead of passing the 
income through to the members to pay income tax on their personal income tax returns or on a composite return. 
Act 362 also amends Arkansas Code Annotated 26-51-404 to exempt income subject to similar taxes in other 
states from Arkansas income tax for residents and part-year residents for tax years beginning in 2022 and after. 

The Pass-through Entity Tax (PET) election must be made by the extended due date of the income tax return but may 
be made at any time prior by registering for the tax on combined registration forms or by completing Form AR362, 
or by registering for the tax in ATAP. Form AR362 for registration, Form AR1100PET, the income tax return and 
vouchers for estimated payments for the Pass-through Entity Tax are available on the DFA Web site. The election 
to be taxed at the entity level and the exemption from income tax of income subject to similar taxes in other states 
is available at: https://www.dfa.arkansas.gov/income-tax/pass-through-entity/pass-through-entity-forms/. The tax 
rate for tax years beginning in 2022 was set at 5.9% on income other than capital gains and 2.95% for the Pass-
through Entity Tax. However, Acts 1 and 2 of the Third Extraordinary Session of 2021 amended the tax rate to be 
equal to the maximum income tax rate for individual income taxes.  Therefore, the tax rate for income other than 
capital gains for tax years beginning in 2022 is 4.9% and the tax rate for capital gains is 2.45%.

Sub-S Corporations that elect the PET tax should not file Form AR1100S.

Act 629 of 2021 amends Arkansas Code Annotated 26-51-807(a) to allow taxpayers an extension to file of one 
month after the extended due date for a federal income tax return for tax years beginning on or after January 1, 
2021. The one month extended due date does not apply to returns for which a federal extension is not requested 
and does not extend the original due date. As a reminder all tax payments are due on the original return due date 
and interest at 10% per annum and failure to pay penalties at 5% per month will be assessed on all taxes unpaid 
after the original due date which is April 15 for calendar year filers and the 15th day of the fourth month after the 
end of a tax year that does not end in December.

                                                                       th
Act 48 of 2017 provides that Arkansas corporate income tax returns be filed by April 15  for calendar years beginning 
                                      th         th
on and after January 1, 2016, and the 15 day of the 4  month following the end of the tax year for all fiscal year filers. 

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The AR1155 Arkansas Request for Extension now contains a Corporation Extension Payment Voucher included on 
the form to be used only with the Arkansas Extension form.

Act 434 of 2017 amends ACA 26-51-409(b) to require a corporation filing a federal Subchapter S income tax return 
to file an Arkansas Subchapter S income tax return. ACA 26-51-413(b) is repealed. Effective for tax years beginning 
on and after January 1, 2018. Arkansas no longer requires a separate election to be considered an S Corporation. 
Taxpayers will file the federal 1120S return along with the Arkansas AR1100S return and will be considered an S 
Corporation for Arkansas filing purposes, if not electing to be taxed under the Elective Pass-Through Entity Tax Act 
362 of 2021 for the tax year. 

Schedule A-Worksheet for Apportionment of Multistate Corporation has been changed. Part B Apportionment Factor, 
Line 1.c., is now the Total Property line.

The Arkansas K-1 form has been developed for Subchapter S corporations to report each shareholder’s share of 
the corporation’s income, deductions, credits, etc. The Arkansas Schedule K-1 (AR K-1)  is required to be submitted. 
Adjustments to convert federal amounts may be necessary for a number of items including but not limited to capital 
gains, interest income, depreciation, Section 179 deductions, contributions and others. The amount reported for 
each shareholder should be the total Arkansas amount for an item of income, deduction or credit multiplied by the 
shareholders ownership percentage.

ATAP – Arkansas Taxpayer Access Point

Arkansas Taxpayer Access Point (ATAP) is available for the filing of most Arkansas Corporation Income Tax returns 
and tax payments. Federal returns and other required schedules must be attached with the ATAP filing or mailed 
separately to the Corporation Income Tax Section. They may be provided on CD, in PDF, or in paper form. The secure 
online filing, managing, and payment options of ATAP are available at www.atap.arkansas.gov. Taxpayers and their 
authorized representatives will be able to view and manage their Corporation Income Tax activity including other tax 
activity such as Individual Income Tax, Sales Tax, Withholding Tax, and other taxes administered by DFA.

Accountants and attorneys must obtain permission from their clients to access and view their client’s accounts. ATAP 
is a web-based service that will give taxpayers, or their designated representative, online access to their tax accounts, 
and offers the following services:

Register a business, file a return online, file a return using XML return upload, change a name, change an address, 
amend a return, make a payment, store banking information for use during payment submission, view tax period 
financial information (tax, penalty, interest, credits, balance, etc.), view payment received, view recent account activity, 
view correspondence from the department.

If you are currently enrolled with our online systems to either make payments or file a return electronically, you will 
need to sign up in ATAP to take advantage of the enhanced services. To correctly process payments on ATAP, make 
sure you are choosing the correct type of payment and applying it to the correct tax year.

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Subchapter S Corporation Election and Instructions

ACA 26-51-409(b) states that an election made under 6. It has only one class of stock.
Subchapter S for federal income tax purposes is deemed 7. It is not an ineligible corporation as defined in IRC
to have been made for Arkansas income tax purposes. It 1361.
also states that a corporation that has elected to be Sub
S for federal purposes shall not elect to be treated as a C 8. Banks may elect S Corp status even though the
corporation for Arkansas income tax purposes. bank stock is owned by an individual’s IRA rather
than the individual.
Subchapter S of the Internal Revenue Code, 26 U.S.C.
Section 1361 et seq., as in effect on January 1, 2019, has To expedite processing of the AR1100S, it is
been adopted for the purposes of computing Arkansas essential that the following items are completed:
income tax liability.
A. Tax Year Beginning and ending date
To be Recognized as an Arkansas S-Corporation B. Corporation name, address, city, state, zip code
C. Date of Incorporation
The following must be completed: D. FEIN (Federal Employer Identification Number)
E. NAICS Code (same as on Federal return)
1. The business must register with the AR Secretary F. Date began business in Arkansas
of State. (501) 682-3409 or www.sos.arkansas.gov G. Filing Status (check only one box)
H. Type of corporation (check only one box)
2. For tax years beginning before January 1, 2018 the
business must file an Election by Small Business
Filing Declaration of Estimated Income Tax
Form (Federal Form 2553) with the IRS; apply for
a Federal Employer Identification Number (FEIN) Every taxpayer who can reasonably expect to owe
(Form SS-4) and submit an Arkansas Election by Arkansas income tax in excess of $1,000 must make an
Small Business Corporation (Form AR1103). You estimate and pay in equal installments tax due thereon.
may apply online at IRS.gov or by calling 1-800- The declaration shall be filed with the Commissioner of
th th
829-3676. Revenue on or before the 15 day of the 4 month of the
3. For tax years beginning on or after January 1, 2018, a income year of taxpayer. Taxpayers whose income from
Federal Subchapter S corporation must also file as farming for the income year can reasonably be expected
an Arkansas S corporation; taxpayers are no longer to amount to at least two-thirds (2/3) of the total gross
allowed to file as a C corporation if filing as a Federal income from all sources for the income year, may file such
S corporation. th
declaration and pay the estimated tax on or before the 15
nd
day of the 2 month after the close of the income year.
For tax years beginning before January 1, 2018, a
In lieu of filing any declaration, the taxpayer may file an
corporation may elect to be treated as a “Small Business th
income tax return and pay the tax on or before the 15 day
(S) Corporation” for Arkansas income tax purposes. The th
of the 4 month after the close of the income year.
election may be made only if the corporation meets all of
the following requirements:
NOTE: Estimate payments made on composite returns
(AR1000CR) should be made to the Individual Income
1. It is treated as a Small Business Corporation with
Tax Section on the AR1000CRES Voucher.
the Internal Revenue Service (IRS).

2. It has no more than one hundred (100) shareholders. For proper processing please verify you are choosing
Members of a family (and their estates) can be the correct payment type and applying it to the correct
treated as one shareholder for this requirement. All tax year with the correct voucher.
other persons are treated as separate shareholders.
3. It must be a corporation organized or created under If the corporation is the Parent of one or more Qualified
the laws of the United States, a state, or territory, Subchapter S Subsidiaries (QSSS), the Parent must
or it is a similar association taxed as a corporation. file the AR1100S return and include schedules for
the Q Subs in the Parents return. Attach a schedule to
4. Its shareholders are individuals, estates and certain the Parent’s Arkansas S return, Form AR1100S, listing
trusts described in IRC 1361. A shareholder cannot all QSSS entities included in the Arkansas S return. The
be a Corporation or Partnership. schedule must list the entity by name and the entity’s
5. It has no nonresident alien shareholders. federal employer identification number (FEIN) or if the
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entity does not have an FEIN, state “NO FEIN”. A QSSS         General Information on Filing 
may not file an Arkansas Corporation income tax return.
                                                              As A Subchapter S Corporation
Act 1041 of 2021 repeals the Small Business Entity 
Tax Pass-Through Act in Arkansas Code Title 4, Chapter        ACA 26-51-409(B)(3) requires a Subchapter S corporation 
32 and creates the Uniform Limited Liability Company          to attach a copy of its Federal income tax return. 
Act in a new Chapter 37 of Arkansas Code Title 4. The 
Act specifies that a Limited Liability Company is classified  Who Must File
and taxed in the same manner for Arkansas purposes as 
it is for Federal income tax purposes unless it elects to     Every corporation organized or registered under the laws 
be taxed under the Elective Pass-Through Entity Tax Act,      of this state, or having income from Arkansas Code Section 
Act 362 of 2021.                                              26-51-201 (with the  exception of  those corporations 
                                                              exempted by Arkansas code Section 26-51-303, or entities 
Act 362 of 2021 creates A new Chapter 65 to Arkansas          electing the Pass-Through Entity Tax Act 362 of 2021 must 
Code Title 26 and creates the Elective Pass-Through Entity    file an income tax return). Corporations must file Form 
Tax for tax years beginning on or after January 1, 2022.      AR1100S if: 
Act 362 allows members holding 50% or more of a pass-
through entity to elect to have the pass-through entity       They are considered to be a Subchapter S corporation with 
pay Arkansas income taxes itself instead of passing the       the IRS and the election remains in effect. Corporations 
income through to the members to pay income tax on their      filing a Composite Return must file on an AR1000CR and 
personal income tax returns or on a composite return. Act     file it with the Individual Income Tax Section. If you have 
362 also amends Arkansas Code Annotated 26-51-404 to          questions regarding Composite returns, you can reach 
exempt income subject to similar taxes in other states from   the Individual Tax Section at (501) 682-1100 or https://
Arkansas income tax for residents and part-year residents     www.dfa.arkansas.gov/income-tax/composite-filing/  
for tax years beginning in 2022 and after. The pass-through   (ACA 26-51-919)
entity tax election must be made by the extended due date 
of the income tax return, but may be made at any time         Pass-Through Entities Required To Withhold 
prior by registering for the tax on combined registration     Income Tax
forms or by completing Form AR362. Form AR362 and 
vouchers for estimated payments for the Pass-through          Pass-through entities are required to withhold income tax 
Entity Tax are available on the DFA website. The election to  on the applicable distributions to non resident individuals 
be taxed at the entity level and the exemption from income    that are attributable to income from other souces within 
tax of income subject to similar taxes in other states is not the state.  A pass-though  entity is a business  entity 
available for 2021                                            (corporation  treated  as  a  Subchapter  S  corporation,  a 
                                                              general partnership, limited liability company, or a trust) that 
The Arkansas Business Corporation Act amended (ACA            is not taxed as a corporation for federal or Arkansas 
4-26-101), the Small Business Entity Tax Pass Through Act     income tax purposes.
(ACA 4-32-101) concerning Limited Liability Companies 
(LLCs), and enacts the Uniform Partnership Act and the        ACT 760 of 2017 amends ACA 26-51-919(a)(2),(b)(I), 
Revised Limited Partnership Act to allow any business         (A)(i), (c)(5)(A), and (d) for the income tax withholding 
entity to convert or merge with any other business entity.    requirements for members or owners of a pass-through 
The franchise tax provisions are amended to apply to LLCs.    entity to require withholding on corporate partners and 
                                                              to allow corporate partners to participate in composite 
Failure to report and remit on the part of any non            returns. Effective for tax years beginning on and after 
resident shareholder shall be grounds upon which              January 1, 2018.
the Director may revoke the Corporation’s Subchapter 
S election and collect the tax from the Corporation by        The  pass-through  entity  is  required  to  file  an  annual 
any manner authorized by the Arkansas Income Tax              return that shows the total amount of income distributed 
Act of 1929 as amended (ACA 26-51-409(c)(2).                  or credited to its nonresident members and the amount of 
                                                              tax withheld and remit the tax on behalf of the nonresident 
                                                                                      th th
                                                              member no later than the 15  day of the 4  month following 
                                                              the end of the tax year.

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A pass-through entity is not required to withhold tax for       The annual income tax return of a Subchapter S Corporation 
a nonresident if:                                               is to be submitted on Form  AR1100S. Generally,  a 
1. The member’s share of income is less than $1,000;            “Subchapter S ” election permits the taxable income of the 
                                                                Subchapter S Corporation to be taxed to the shareholders 
2. The member’s income is not subject to withholding;           rather than to the corporation. All resident and nonresident 
3. The member elects to have the tax paid as part of a          shareholders of S Corporations doing business in Arkansas 
   composite return filed by the pass-through entity as allowed must file a properly executed Arkansas Income Tax Return 
   by the act;                                                  with the Department  of Finance  and  Administration. 
                                                                Arkansas income tax must be paid on the shareholders’ 
4. The entity is a publicly traded partnership as defined       taxable income on an Arkansas AR1000, an AR1000NR 
   by IRC 7704(b) that is treated as a partnership for          for non resident filers or AR1000CR if filing on a Composite 
   federal tax purposes and has agreed to file an annual        return with Arkansas Individual Income tax. 
   information return reporting the name, address, and 
   taxpayer identification number of each member with           Period Covered/Accounting Method
   Arkansas income greater than $500; 
5. The entity has filed the member’s signed agreement to        A corporation must calculate its Arkansas Taxable Income 
   file and pay Arkansas nonresident income tax; or             using the same income year and accounting  method 
                                                                for Arkansas tax purposes as used for Federal income 
6. The member’s income is exempt from Arkansas income 
                                                                tax purposes. For tax years beginning after 1986, all S 
   tax pursuant to ACA 26-51-202(e). 
                                                                Corporations are required to have a permitted tax year. A 
                                                                                                              st
                                                                permitted tax year is a tax year ending December 31  or 
Time for Filing
                                                                any other tax year for which the S Corporation established 
                                      th              th        a business purpose. 
Form AR1100S is due on or before the 15  day of the 4
month following the close of the Corporation’s tax year. 
                                                                The corporation must  provide to  the Commissioner  a 
                                                                copy of any certification or approval from the Internal 
Extension of Time for Filing 
                                                                Revenue Service authorizing the corporation to change 
                                                                its accounting method or income year. 
If you have received an automatic Federal extension (Form 
7004), the time for filing your Arkansas Corporation Income 
                                                                Signatures and Verification
Tax Return shall be extended until the due date of your 
Federal  Return for a US domestic corporation.  When 
                                                                ACA 26-51-804  (b) provides,  the President, Vice-
filing the Arkansas AR1100S, check the box at the top 
                                                                President, Treasurer, or other principal officer shall certify 
indicating that the Federal Extension Form 7004 and/or 
                                                                the return. Such agent may certify the return of a foreign 
Arkansas Extension Form AR1155 has been filed and file 
                                                                corporation having an agent in the state. If receiver, trustee 
the Arkansas return on or before the Federal due date. It 
                                                                in bankruptcy, or assignee are operating the property or 
is no longer necessary to include a copy of the Federal 
                                                                business of the corporation, such receiver, trustee, or 
Form 7004. To request an initial Arkansas extension of 
                                                                assignees shall execute the return for such corporation 
180 days from the original Arkansas return due date or 
                                                                under certification.
an Arkansas extension of 60 days beyond the Automatic 
Federal extension due date, complete and mail Arkansas          Change in Federal Taxable Income
Form AR1155 Request for Extension of Time for Filing 
Income Tax Returns by the due date or, if applicable, the  Revenue Agent Reports  (RARs) must be reported  to 
extended due date of the Arkansas return to the Corporation  this state within 180 days after the receipt of the RAR 
Income Tax Section.                                             or supplemental report reflecting correct net income of 
                                                                taxpayer. Amended returns must be filed with payment of 
Arkansas extension(s) must be attached to the  Arkansas 
                                                                any additional tax due. ACA 26-18-306(b)(3)(B) states that 
income tax return. Interest  at 10% per annum is due on 
                                                                a refund shall not be paid if the amended return is filed on 
all returns (including those with extensions) if the tax is     st 
                                                                or after the 181 day following receipt of the notice from 
not paid by the original return due date. Interest will be 
                                                                the IRS. Any additional tax and interest must be paid with 
computed on a daily rate of .00027397. To avoid interest 
                                                                the amended return or a refund must be requested on an 
and/or penalty, any tax due payment must be made on 
               th      th                                       amended return if applicable. Statute of Limitations will 
or before the 15  day of the 4  month following the close 
                                                                remain open for three (3) years for assessment of tax if the 
of the Corporation’s tax year. Attach your check to the 
                                                                taxpayer fails to disclose Federal Revenue Agent Reports.
Extension Voucher attached to Form AR1155 if requesting 
an Arkansas extension. 
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Penalties and Interest                                            General Instructions 
                                                                         Specific Line Instructions for 
The following penalties shall be imposed:
                                                                         Page 1 of AR1100S Return
Failure to file timely - 5% per month not to exceed
35%.
                                                            Type Return
Failure to make timely remittance - 5% per month not to
exceed 35%.
                                                            Whether the S Corporation is filing an Initial Return (first 
Underestimate penalty - 10% of the amount of the            time filing), an Amended Return (making changes to an 
underestimate.                                              original return), a Final Return (going out of business), 
Failure to file return - $50.00.                            or filing as a Cooperative Association, clearly mark the 
Failure to make required EFT payment - 5% of the tax        AR1100S by checking the applicable box at the top of 
due.                                                        the form. 
Incomplete electronic payment -10% of the amount
of the draft or $20.00, whichever is greater.               Income

Failure to Comply - $50.00.
                                                            CAUTION:  Report only trade or business activity income 
                                                            or loss on Lines 7 through 12. Do not report rental activity or 
Liability for Filing Returns
                                                            portfolio income or loss on these lines. Report the Arkansas 
Every corporation organized or registered under the laws    portion of rental income and expenses and portfolio income 
of this State, or having income from Arkansas sources as    and expenses distributable to each shareholder on the 
defined in ACA 26-51-205, must file an income tax return.   Schedule AR K-1.

Balance Sheet                                               Line 7 - Gross Sales 

The balance sheet submitted with the return should be       If engaged in trading or manufacturing, enter on page 1 
prepared from the books and should agree therewith,         of return, the gross receipts, less goods returned and any 
or any difference should be reconciled.  All corporations   allowances or discounts from the sale price.
engaged in an interstate trade or business, and reporting 
to the Surface Transportation Board and to any national,    Line 8 - Cost of Goods Sold 
state, municipal, or other public office, may submit copies 
                                                            Enter the cost of goods sold.  Attach schedule and explain 
of their balance sheets prescribed by said Board, or state 
                                                            fully the method used.
and municipal authorities, as of the beginning and end of 
the taxable year. If the balance sheet as of the beginning 
                                                            If the production, purchase, or sale of merchandise is 
of the current taxable year does not agree in every respect 
                                                            an income producing  factor in the trade or business, 
with the balance sheet which was submitted as of the end 
                                                            inventories of merchandise on hand should be taken at 
of the previous taxable year, a reconciliation schedule 
                                                            the beginning and end of the taxable year, which may be 
should be submitted with the return. Balance sheets as 
                                                            valued at the lower of cost or market.  Explain fully the 
of the beginning and close of the year and a reconciliation 
                                                            method used. In case the inventories reported on the return 
of surplus must be attached to the return.
                                                            do not  agree with those shown on the balance sheet, 
                                                            attach a statement explaining how the difference occurred. 

                                                            Line 9 - Gross Profits 

                                                            Enter the gross profit which is obtained by deducting Line 
                                                            8, the cost of goods sold as extended from Line 7, the 
                                                            gross sales. 

                                                            Line 10 - Net Gain or (Loss) From Form 4797 

                                                            Enter gains or losses from the sale, exchange,  or 
                                                            involuntary conversion of assets used in trade or business 
                                                            activity. If the corporation is also a partner in a partnership, 
                                                            include the partner’s share of gains (losses) from sales 
                                                            or exchanges, involuntary or compulsory  (other than 
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casualties or thefts), of the partnership’s trade or business return. Do not include interest expense related to rental
assets. Do not include any recapture of expense deduction activity, portfolio, or investment income.
for recovery property (Federal Code Section 179).
Line 20 - Depreciation
Line 11 - Other Income
Depreciation expense claimed. ACA 26-51-428 does
Enter any other taxable trade or business income not listed not adopt the bonus depreciation provisions contained
above and explain its nature on an attached schedule. in Internal Revenue Code 168(k). For Arkansas income
tax purposes, Internal Revenue Code Sections 167 and
Line 12 - Total Income (Loss) 168 (a) – (j) as in effect on January 1, 2019 is adopted
for tax years beginning on or after January 1, 2019.
Enter the Total Income (Loss); add lines 9 through 11.
Internal Revenue Code Section 179 as in effect on
Deductions January 1, 2022 is adopted for tax years beginning on or
CAUTION: Report only trade or business activity related after January 1, 2022. For tax years beginning on or after
expenses on lines 13 through 25. Do not report rental activity January 1, 2022, the Arkansas Section 179 deduction
expenses or expenses related to any portfolio income on limit will be $1,080,000 and the dollar-for-dollar phaseout
these lines. Report the Arkansas rental activity income and will begin at $2,700,000. For tax years beginning on or
expenses and portfolio income and expenses distributable after January 1, 2011 and beginning before January
to each shareholder on the Arkansas Schedule AR K-1. 1, 2022, the Arkansas Section 179 deduction limit is
$25,000 and the phaseout begins at $200,000. Form
Line 13 - Compensation of Officers AR1100REC will need to be completed for any taxpayer
filing a corporation income tax return or pass-through
Enter the compensation of officers in whatever form paid. entity tax return and claiming a Section 179 deduction.
Carryforward of Section 179 deductions from prior
Line 14 - Salaries and Wages years may be used towards the Arkansas Section 179
Enter the amount of salaries and wages (other than wages deduction limitation but may only be claimed if Arkansas
and salaries deducted elsewhere on your return) paid depreciation deductions were not claimed in those
or incurred for the tax year. Do not reduce this figure by prior years. If the Arkansas Section 179 deduction is
Federal jobs credit. different from the federal Section 179 deduction, a Form
4562 depreciation schedule will need to be completed
showing the calculation of the Arkansas depreciation
Line 15 - Repairs
deduction.In addition, Internal Revenue Code Section
Enter the cost of incidental repairs related to any trade or 179D Energy Efficient Commercial Buildings deduction
business activity. is not an allowed deduction. Arkansas Legislature has
not adopted this IRC code.
Line 16 - Bad Debts
Line 21 - Depletion
Enter the amount of bad debt incurred during the year.
The S Corporation can only use the specific charge-off Enter depletion expense claimed. Arkansas allows federal
method for figuring its bad debt deduction. depletion allowances as in effect January 1, 2019. In
computing depletion allowance deduction for oil and gas
Line 17 - Rent wells, the depletion deduction shall be controlled by the
provisions of IRS section 613A as in effect January 1, 2019.
Enter rent paid for trade or business property in which the
S Corporation has no equity.
Line 22 - Advertising
Line 18 - Taxes Enter any advertising for the business.
Enter taxes paid or accrued during the taxable year. Do not
Line 23 - Pension, Profit-Sharing Plans, etc
include Arkansas income taxes, Federal income taxes, or
taxes assessed against local benefits tending to increase Enter the amount of pension or profit sharing plans.
the value of the property.
Line 24 - Employee Benefit Programs
Line 19 - Deductible Interest
Enter employee benefit programs for the business.
Enter interest incurred in the trade or business activity
of the corporation that is not reported elsewhere on the
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Line 25 - Other Deductions Excess Net Passive Income Tax Worksheet

Enter any other authorized deductions related to any trade 1. Enter Arkansas gross receipts tax for the
or business activity for which there is no line on page 1 of tax year (See IRC Section 1362 (d)(3)(B)
this form. Internal Revenue Code Section 179D Energy for gross receipts from the sale of capital
Efficient Commercial Buildings deduction is not an allowed assets.)* .....................................................
deduction. Arkansas Legislature has not adopted this IRC
2. Enter Arkansas passive investment income
code. as defined in IRC* Section 1362 (d)(3)(C) ...

Line 26 - Total Deductions 3. Enter 25% of Line 1 (If Line 2 is less than
Line 3, stop here. You are not liable for this
Enter the Total Deductions (add Lines 13 through 25). tax.) ............................................................

4. Excess Arkansas passive investment
Line 27 - Net Income (Loss) From Trade or Business income (Subtract Line 3 from Line 2.) .........
Activity
5. Arkansas expenses directly connected
Enter the net income or loss from trade or business activity with the production of income on Line 2
(Subtract Line 26 from Line 12). [See IRC* Section 1375(b)(2)] ....................

Line 28 - Excess Net Passive Income Tax 6. Net passive income (Subtract Line 5
from Line 2.) ...............................................
Enter the amount of excess net passive income tax due. If the
corporation has always been a Subchapter S Corporation, 7. Divide amount on Line 4 by amount
then line 28 tax does not apply to the corporation. If the on Line 2. ...................................................

corporation has “C” corporation earnings and profits at the 8. Excess net passive income (Multiply
close of the tax year, has passive investment income that is Line 6 by Line 7.) ........................................
in excess of 25% of gross receipts, and has taxable income
at year end, the corporation must pay a tax on the excess 9. Enter taxable income (See instructions
passive income. Complete Lines 1 through 3 and Line 9 for taxable income below.) ..........................

of the worksheet on this page to make this determination. 10. Enter the smaller of Line 8 or 9 ...................
If Line 2 is greater than Line 3 and the corporation has
taxable income, it must pay the tax. Complete a separate 11. Excess net passive income tax – Enter
schedule using the format of Lines 1 through 11 of the 5.1% of Line 10. Enter here and on
worksheet on this page to figure the tax. The tax rate for Line 28, page 1, Form AR1100S. ................
2023 is 5.1% *Income and expenses on Lines 1, 2, and 5 are from
total Arkansas operations for the tax year. This includes
Line 29 - Income Tax on Capital Gains/Built in gains applicable income and expenses from page 1, Form
Enter the amount from Schedule D, page 2, A7+B6. AR1100S as well as those that are reported separately
on Federal Schedule K. See IRC Section 1375(b)(4) for
Line 30 - Total Tax exceptions regarding Lines 2 and 5.

Add Lines 28 and 29, if Amended Return checked, Enter Line 34 - Tax Due
Amended Total Tax.
If Line 31 plus Line 32 is less than Line 30, enter the
Line 31 - Estimated Tax Paid amount due.

Enter Estimated Tax paid, including estimate carryforward Line 35 - Overpayment
from prior year.
If Line 31 plus Line 32 is greater than Line 30, enter the
Line 32 - Withholding Payment difference.

Attach AR1100-WH. Only enter an amount on this line if Line 36 - Refund Estimated Tax Credit
withholding is to be applied to the Sub S return and not
to shareholders. Amount of refund to be credited to next tax year.

Line 33 - Amended Return Only Line 37 - Refund
Enter Net Tax paid (or refunded) on previous returns for Line 35 less Line 36.
this tax year.
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Taxable Income (Line 9 of the Excess Net Passive                regular course of the taxpayer’s trade or business and 
Income Tax Worksheet)                                           includes income from tangible and intangible property 
                                                                if the acquisition, management, and disposition of the 
Line 9, taxable income, is defined in IRC Section 1374(d).      property constitute integral parts of the taxpayer’s trade 
Figure  this income by completing  Lines  9 through  27  or business operations. In essence, all income which arises 
of page 1, or Schedule A, page 2 of Form AR1100CT,  from the conduct of trade or business operations of a 
Arkansas Corporation Income  Tax  Return. Include  taxpayer is business income. Income of any type or class 
the Form AR1100CT computation with the worksheet  and from any source is business income if it arises from 
computation  you attached to Form AR1100S. You do  transactions and activity occurring in the regular course 
not have to attach the schedules etc. called for on Form  of a trade or business. In general, all transactions and 
AR1100CT. However you may want to complete certain  activities of the taxpayer’s economic enterprise as a whole 
schedules such as Schedule D, Form AR1100S.                     constitute the taxpayer’s trade or business and will be 
                                                                considered “Business Income”, unless otherwise excluded 
Schedule D (Form AR1100S)                                       by Arkansas law. ACA 26-51-701(e) defines Nonbusiness 
                                                                income as all income other than business income.
Enter on Line 29 the tax from Schedule D, Form AR1100S, 
                                                                For  tax  years  beginning  on  or  after  January  1,  2021, 
page 2. If net capital gain for Arkansas is $25,000 or less, 
                                                                all multistate corporations should use the single sales 
the corporation is not liable for capital gains tax. If the net 
                                                                factor only unless they are required  to use a three 
capital gain is more than $25,000 you must determine if the 
                                                                factor apportionment formula under the special industry 
corporation owes the tax in part A, or part B of Schedule 
                                                                apportionment regulations. If a special industry three-factor 
D, Form AR1100S. The tax rate for 2023 is 5.1%
                                                                apportionment rule applies, the business income is to be 
                                                                apportioned to this state by multiplying the income by a 
Part A – Capital gains tax computation 
                                                                fraction; the numerator of which is the property factor, plus 
                                                                the payroll factor plus two (2) times the sales factor, and 
If the corporation made its election to be an S Corporation 
                                                                the denominator of which is four (4).
before 1987, IRC Section 1374 (as in effect before the 
enactment of the Tax Reform Act of 1986) continues to  The sales factor is a fraction; the numerator of which is 
impose a tax on certain gains of the S Corporation. Consult  the total sales of the taxpayer in this state during the tax 
the IRS instructions to determine if you are liable for this  period and the denominator of which is the total sales of 
tax. If so, complete Part A, Schedule D, Form AR1100S.  the taxpayer everywhere during the tax period. 
If multistate, under Schedule D, part A, Line 3, multiply by 
                                                                Sales of tangible personal property are in this state if:  
apportionment factor from Part B, Line 5 of Schedule A.
                                                                (a) the  property is delivered or shipped to a purchaser, 
                                                                other than the United States Government, within this State 
Part B – Built-in gains tax computation
                                                                regardless of the f.o.b. point or other conditions of the 
                                                                sale or: (b) the property is shipped from an office, store, 
If the corporation made its election to be an S Corporation 
                                                                warehouse, factory, or
after December 31,1986, IRC Section 1374 provides for a                              other place of storage in this State 
                                                                and: (1) the purchaser is the United States Government or: 
tax on built-in gains that applies to certain S corporations. 
                                                                (2) the taxpayer is not taxed in the State of the purchaser.
Consult the IRS instructions to determine if you are liable 
for this tax. If so, complete Part B, Schedule D, Form  Sales, other than sales of tangible personal property, are 
AR1100S. If multistate, under Schedule D, Part B, Line  in this State if the income producing activity is performed 
2, multiply apportionment factor from Part B, Line 5 of  both within and without the State, in which event the income 
Schedule A.                                                     allocable to this State shall be the percentage that is used 
                                                                in the formula for apportioning business income to this 
Worksheet for Apportionment of                                  State. 
Multistate Corporations
                                                                Prior written approval is required before deviation 
For corporations with income from sources within and 
                                                                from the allocation and apportionment method.
without the State:
In general, taxpayers with income derived from activities       Apportionment Formula
both within and outside the State are required to allocate 
and apportion the net income under the following:               Construction  companies,  pipelines,  and private 
                                                                railcar operators  must  utilize the  three factor  double 
Business  Income  is  defined  in ACA  26-51-701(a) as          weighted  sales  factor  apportionment  method,  briefly 
income  arising  from transactions  and  activity in the        outlined on page 17. Broadcasters and publishers will 
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use sales factor only, as modified in the regulation. c. Sales of intangible personal property if the taxpayer’s
Railroads operating within and without the State commercial domicile is in this stae.
may use either single sales factor or three factor
apportionment beginning tax years effective January 1, 4. Interest and dividends if the taxpayer’s commercial
2023. Requirements for apportionment formulas of the domicile is in the state.
businesses listed in this paragraph (except for financial
institutions) are contained in the Arkansas Corporation 5. Patent and copyright royalties: If and to the extent that
Income Tax Regulations which may be obtained from the patent or copyright is utilized by the taxpayer in this
www.dfa.arkansas.gov/income-tax/corporation/. State, or if and to the extent that the patent or copyright
For financial institutions the use of the single sales factor is utilized by the taxpayer in a state in which the taxpayer
is outlined in Arkansas Code Annotated 26-51-1403. is not taxed and the taxpayer’s commercial domicile is in
this State. A copyright is utilized in a state to the extent that
The following items of income to the extent printing or other publication originates in the state. If the
that they do not constitute business income basis of receipts from copyright royalties does not permit
are to be allocated to this state: allocation to the states or if the accounting procedures
do not reflect states of utilization, the copyright is utilized
1. Net rents and royalties from real property located in in the state in which the taxpayer’s commercial domicile
the state. is located.

2. Net rents and royalties from tangible personal property: If the allocation and apportionment provisions as set out
(a) if and to the extent that the property is used in this state above do not fairly represent the extent of the taxpayer’s
or business activity in this state, the taxpayer may petition for,
(b) in their entirety if the commercial domicile is in the or the Director of Revenue, Department of Finance and
state and the taxpayer is not organized under the laws of Administration may require, in respect to all or any part of
or taxed in the state in which the property is utilized. the taxpayer’s business activity, if reasonable:

The extent of utilization of tangible personal property in a 1.Separate accounting

state is determined by multiplying the rents and royalties 2. The inclusion of one or more additional factors which
by a fraction; the numerator of which is the number of will fairly represent the taxpayer’s business activity in
days of physical location of the property in the state during this state, or
the rental or royalty period in the taxable year, and the
3. The employment of any other method to effect an
denominator of which is the number of days of physical
equitable allocation and apportionment of the taxpayer’s
location of the property everywhere during all rental or
income. To “petition for” and approved by DFA shall mean
royalty periods in the taxable year. If the physical location of
a formal written request submitted and approved prior to
the property during the rental or royalty period is unknown
the filing of a return.
or unascertainable by the taxpayer, tangible personal
property is utilized in the state in which the property was Schedule A-Apportionment of Income for Multistate
located at the time the taxpayer obtained possession. Corporation

3. Gains and losses from sales of assets: Enter the FEIN in the box provided.
a. Sales of real property located in the state.
Part A - Income To Apportion
b. Sales of tangible personal property.
Line 1: Enter net income (amount from page 1, Line
(1) The property had a situs in this state at the time 27, Total Column)
of sale, or
(2) The taxpayer’s commercial domicile is in this state, Line 2: Add Adjustments (Attach Schedule)
or
(3) The property has been included in depreciation Line 3: Deduct Adjustments (Attach Schedule)
which has been allocated to this state, in which
event gains or losses on sales shall be allocated Line 4: Enter Arkansas Total Apportionable Income.
on the percentage that is used in the formula for (Line 1 + Total Amount from Line 2 - Total Amount from
allocating income to the state. Line3 = Line 4 Total Arkansas Apportionable Income)

Note: Lines 2 and 3 are for reporting any adjustments
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to taxable income that result in differences between which is included in the computation of the apportionable
Federal and Arkansas tax laws. income tax base for the taxable year. (ACA 26-51-713
and ACA 26-51-1405)
Part B - Apportionment Factor
Column A is total compensation paid within Arkansas;
Column A is for Amounts in Arkansas; Column B is Column B is total compensation paid everywhere during
the Total Everywhere; Column C is the Percentage the tax year; Column C is the percentage of Column (A)
of Column (A)÷(B). Calculate all percentages to six ÷ (B).
(6) places beyond whole percentages. Example
26.123456% Line 2: Enter Salaries, Wages, Commissions and
Other Compensation Related to the Production of
Property Factor: The property factor is only to Business Income.
be used if the taxpayer is subject to a special
industry regulation that requires a modified three Sales/Receipts Factor: The receipts factor is a fraction,
factor apportionment method. The property factor is the numerator of which is the total sales of the taxpayer
a fraction, the numerator is the average value of the in this State during the tax period, and the denominator
taxpayer’s real and tangible personal property owned of which is the total sales of the taxpayer everywhere
or rented and used in this State during the tax period, during the tax period. The method of calculating receipts
and the denominator is the average value of all the for purposes of the denominator is the same as the
taxpayer’s real and tangible personal property owned method used in determining receipts for purposes of the
or rented and used during the tax period. Please refer numerator. The receipts factor shall include only those
to the special industry apportionment regulations receipts which constitute business income and are
for any modifications required. included in the computation of the apportionable income
base for the taxable year. Arkansas requires receipts to
Line 1: Enter Property Used in Business be gross receipts instead of net receipts.
Line a: Tangible Assets Used in Business and
Inventories. Line 3: Sales/Receipt

(a1) Enter the amount at the beginning of the year in
(a) Enter Destination Shipped from Within Arkansas:
both Column A and Column B.
Sale of property that is delivered or shipped by a seller
(a2) Enter the amount at the end of the year in both located in Arkansas to a purchaser located in Arkansas.
Column A and Column B.
(a3) Enter total amounts: (Add Lines a1 and a2) in (b) Enter Destination Shipped from Without Arkansas:
both Columns. Sale of property that is delivered or shipped to a purchaser
(a4) Enter Average of Tangible Assets: (Line a3 divided located in Arkansas regardless of the f.o.b. point or other
by 2) in both Columns. conditions of the sale.

Line b: Enter Rental Property: (8 times annual rent (c) Enter Origin Shipped from Within Arkansas to
Column A and B.) U.S.Govt.: Gross receipts from sales of tangible personal
property to the United States Government are in this state
Line c: Enter Total Property in both Columns: (Add Lines a4 if the property is shipped from an office, store, warehouse,
and b). factory, or other place of storage in this state and the
In Column C, calculate the Arkansas percent by dividing purchaser is the U.S. Government.
the amount on Line c, Column A by the amount on Line
c, Column B. (d) Enter Origin Shipped from Within Arkansas to
Other Non-Taxable Jurisdictions: Sales of property that
Payroll Factor: The payroll factor is only to be is shipped from an office, store, warehouse, factory or
used if the taxpayer is subject to a special industry other place of storage in Arkansas to a taxpayer that is
regulation that requires a modified three factor not taxable in the state of the purchaser.
apportionment method. The payroll factor is a
fraction, the numerator of which is the total amount paid (e) Enter Other Gross Receipts: Includes items such
in this State during the tax period by the taxpayer for as interest income, other income, proceeds from sales of
compensation and the denominator of which is the total assets, rental income. (Attach schedule)
compensation paid everywhere during the tax period.
The payroll factor shall include only that compensation
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Gross receipts from transactions other than sales of  Adjustments). Partnership losses should be added on 
tangible personal property are attributed to Arkansas if:    Part  A,  Line 2 (Add  Adjustments).  The corporation’s 
                                                             Arkansas partnership income or loss should then be 
1) The income producing activity is performed entirely 
                                                             entered on Part C, Line 2 Add: Direct Income Allocated 
within Arkansas or, 
                                                             to Arkansas line. Attach Forms AR K-1 and if claiming 
2) If the income producing activity is performed  both  withholding, attach Forms AR1099PT.
inside and outside of Arkansas, the income reportable 
to Arkansas is determined by calculating the property,       Line 3:  Enter Total Income Taxable to Arkansas:
payroll, and sales factor excluding  sales from  (Enter amount on C3, and on page 1, Line 27, Arkansas 
transactions  other than the sale of tangible  personal  Column)
property and applying the resulting percentage to the 
Arkansas sales factor numerator for gross receipts           Special Industry Apportionment Rules
from transactions other than sales of tangible personal 
property.                                                    Arkansas Regulations require taxpayers primarily engaged in 
                                                             certain industries to apportion income using a special industry 
(f)  Enter  Total  Sales/Receipts:  (Add  Lines  3a  through apportionment method. See below for a brief description of 
3e). Divide Line 3f in Column A by Line 3f in Column B       each special industry apportionment method. For a complete 
to arrive at the percentage for Line 3f in Column C.         description of industries that are required to modify their 
                                                             apportionment factors, see the Corporation Income Tax 
(g)  Enter  Double  Weighted:  Applies  only  to             Regulations at www.dfa.arkansas.gov.
corporations reporting under the three factor 
special industry regulations. Corporations using a           Construction Contractors
single sales factor apportionment or a single factor 
apportionment method for special industries do not           Arkansas  Regulation  1.26-51-718(d)    modifies 
double weight sales.                                         the property factor to include the average value of 
                                                             construction in progress. It also modifies the payroll factor 
Line 4: Enter Sum of Percentages:  (Single Weighted:         to include compensation paid for particular construction 
Add Column C, Lines 1c, 2a and 3f) (Double Weighted:         projects and compensation “thrown back” to Arkansas if 
Add Column C, Lines 1c, 2a and 3g).                          not reported to another state. The sales factor is modified 
                                                             for the percentage of completion method.
Line 5: Enter Percentage Attributable to Arkansas: 
                                                             Television and Radio Broadcasting
Line 4 divided by the Double Weighted Factor. For Part 
B, Line 5, divide Line 4 by number of entries other than 
                                                             Arkansas  Regulation  2.26-51-718(d) modifies the 
zero which you make on Part B, Column B, Lines (1c), 
                                                             numerator  of  the  sales  factor  shall  include  all  gross 
(2a), and (3f). Also, if Double Weighted Factor applies, 
                                                             receipts of the taxpayer from sources within Arkansas 
any entry other than zero in Part B, Column B, Line (3f), 
                                                             plus a ratable part of film or radio programming revenue 
counts as two (2) entries. For corporations using the 
                                                             including advertising revenue determined by an audience 
sales factor only or a single factor apportionment 
                                                             factor. The audience factor is determined based on the 
method  under  the  special  industry  regulations, 
                                                             ratio that the taxpayer’s Arkansas viewing or listening 
enter the percentage on Line 3 F, Column C. 
                                                             audience bears to its total viewing or listening audience. 
                                                             Television and radio broadcasters should not use a 
Part C - Arkansas Taxable Income                             property or payroll factor for tax years beginning in 2021 
                                                             and after.
Line 1: Enter Income Apportioned to Arkansas. (Part 
A, Line 4) x (Part B, Line 5, Column C).                     Publishing

Line  2:  Enter Direct Income Allocated to Arkansas:  Arkansas  Regulation  3.26-51-718(d)           modifies  the 
Include non-business income and partnership income/  sales factor for taxpayers in the business of publishing, 
loss that are sourced to Arkansas. Arkansas Regulation       selling, licensing or distribution of books, newspapers, 
1.26-51-802(b) requires corporations to directly allocate  magazines, periodicals, trade journals, or other printed 
partnership Arkansas income or loss to Arkansas rather  materials that have income from sources both inside 
than including partnership income  and apportionment         and outside of Arkansas. The sales factor is modified to 
factors in the corporation’s apportionment  formula.  include a “circulation factor”. Publishers should not use 
Multistate corporations with partnership income should  a property or payroll factor for years beginning in 2021 
deduct all partnership income on Part A, Line 3 (Deduct  or after.
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Airlines                                                       Private Railcar Operators

Arkansas Regulation 4.26-51-718(d) requires airlines           Arkansas Regulation 2.26-51-204 requires taxpayers, 
to determine Arkansas net taxable income by taking  other than a railroad, engaged in the business of operating 
that portion of total operating revenue that the total  railcars or in the business of furnishing or leasing railcars 
passenger and freight receipts in Arkansas bears to total  for the transportation of freight or property whether or not 
receipts from both inside and outside of Arkansas. The  owned by such taxpayer, over any railway lines partly 
Arkansas and Total Passenger & Freight Receipts should  within and partly without the State to determine Arkansas 
be included on line 3.f. of Schedule A of Form AR1100S  net taxable income by taking that portion of total net 
with a notation that this represents Passenger & Freight  operating income that the total miles operating in the State 
Receipts.                                                      bears to total system miles operated.

Bus Lines and Trucking Companies                               Public Utilities

Arkansas Regulation 5.26-51-718(d) requires a company          Arkansas Regulation 3.26-51-204 requires telephone, 
whose primary business is bus lines or trucking to             electric power, and gas distribution companies operating 
determine its net income subject to Arkansas income tax        both inside and outside of Arkansas shall allocate and 
by an apportionment formula which is the number of miles       apportion their net income provided under ACA 26-51-701, 
operated within Arkansas divided by the total system miles.    et seq. ACA 26-51-709 requires income to be apportioned 
The Arkansas and Total miles operated should be included       using a single sales factor.
on Line 3.f of Schedule A of Form AR1100S with a notation 
that this represents mileage.
                                                               Allocated Income

Pipelines                                                      Partnership Income

Arkansas  Regulation  6.26-51-718(d) establishes               Act 482 of 2017 amends      ACA 26-51-802(c) to require 
special rules for taxpayers operating a pipeline for the       partnership income from activites within and without this 
transportation of oil or gas both inside and outside of        State that is reflected on a partnership return shall be 
Arkansas. The payroll factor includes compensation paid        apportioned to Arkansas under the uniform Division of 
both inside and outside of Arkansas plus a ratable part for    Income for Tax Purposes Act (ACA 26-51-701 et seq). 
services performed both in and outside the State based         Corporations that are partners in a partnership must 
on the total number of barrel or unit miles in Arkansas        allocate their share of partnership income as shown on 
divided by the total barrel or unit miles system-wide. The     form AR K-1 from the partnership. Partnership Income 
sales factor includes any gas sales and storage sales          subject to Arkansas Pass-Through Entity Tax (PET) should 
within Arkansas  plus  a  proportionate  part  of  system      be excluded from the Arkansas Individual return.
revenue earned in Arkansas determined on the basis of 
total barrel or unit miles within Arkansas to the total barrel Non-Business Income
or unit miles in the system.
                                                               The following items of income to the extent that they 
Railroads                                                      do not constitute business income are to be allocated 
                                                               to this State.
Arkansas Regulation 1.26-51-204 modifies the property, 
payroll, and sales factor to include a mobile component        1. Rents & Royalties:
that is calculated based on miles operated in Arkansas 
                                                                 A) Net rents and royalties from real property located in  
divided by total system miles. ACT 658 of 2023 authorizes 
                                                                      this State.                               
an organization operating a railroad partly within this             
state and partly outside this state to choose between             B) Net rents and royalties from tangible personal  
either single sales factor or three factor apportionment in           property
apportioning its net operating income attributable to this         1) If and to the extent that the property is used in  
state. The act is effective for tax years beginning on or              this State, 
after January 1, 2023                                                  or
                                                                   2) In their entirety, if the commercial domicile is in  
                                                                        this State and the taxpayer is not organized under  
                                                                      the laws of or taxable in the state in which the  
                                                                      property is utilized.
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The extent of utilization of tangible personal property in a     Schedule D - Capital Gains Tax
state is determined by multiplying the rents and royalties 
by a fraction, the numerator of which is the number of           Part A - Tax Imposed on Certain Capital Gain:
days of physical location of the property in the State during 
the rental or royalty period in the taxable year; and the 
                                                                 Line 1: Enter Taxable Income: (See Instructions; Attach 
denominator of which is the number of days of physical 
                                                                 computation schedule)
location of the property everywhere during all rental or 
royalty periods in the taxable year. 
                                                                 Line 2: Enter tax amount on Line 1: (See Instructions 
 
                                                                 for computation of tax)
If the physical location of the property during the rental 
or royalty period is unknown or unascertainable by the 
                                                                 Line 3: Net long-term capital gain reduced by net short-
taxpayer, tangible personal property is utilized in the state 
                                                                 term capital loss: (If Multistate, multiply by apportionment 
in which the property is located at the time the rental or 
                                                                 factor, Part B, Line 5 above)
royalty payer obtained possession.
                                                                 Line 4: Enter the Statutory minimum:
2.  Gain and Losses:

Gains and losses from sales of assets:                           Line 5: Subtract Line 4 from Line 3
 
 A) Sales of real property located in this State.                Line 6: Tax: (Enter 5.1% of Line 5)

 B) Sales of tangible personal property.                         Line 7: Compare Line 2 and Line 6: (Enter the smaller 
      1) The property had a situs in this State at the time      amount here and on Line 29, page 1, Form AR1100S)
              of sale, 
          or
                                                                 Part B - Tax Imposed on Certain Built-In Gains:
      2) The taxpayer’s commercial domicile is in this  
          State,                                                 Line 1: Taxable Income: (See Instrucions; Attach computation 
          or                                                     schedule)
      3) The property has been included in depreciation  
           which has been allocated to this State; in which      Line 2: Recognized built-in gain: (If Multistate, multiply 
         event gains or losses on such sales shall be            by apportionment factor, Part B, Line 5 above)
          allocated on the percentage that is used in the  
          formula for allocating income to this State.           Line 3: Enter smaller of Line 1 or 2

3.  Interest and Dividends:                                      Line 4: Section 1374(b)(2) deduction

Interest and dividends  if the taxpayer’s commercial             Line 5: Subtract Line 4 from  Line 3: (If zero or less, enter 
domicile is in this State.                                       zero here and on Line 6 below)

4. Patent and Copyright Royalties:                               Line 6: Enter 5.1% of Line 5: (Enter here and on Line 29, 
                                                                 page 1, Form AR1100S)
 A) If and to the extent that the patent or copyright is 
      utilized by the taxpayer in this State, 
      or                                                         Payment of Taxes
 B) If and to the extent that the patent or copyright 
      is  utilized  by  the  taxpayer  in  a  state  in  which   The tax due should be paid by attaching to the return a 
      the taxpayer is not taxable and the taxpayer’s             check or money order payable to “Department of Finance 
      commercial domicile is in this State.                      and Administration”. Write the corporation’s FEIN on the 
                                                                 check. Payments with returns may not be made by EFT. 
A copyright is utilized in a state to the extent that printing   Tax due on returns may be made through ATAP. Refer 
or other publications originate in the state. If the basis of    to www.atap.arkansas.gov     for instructions.  To avoid 
receipts from copyright royalties does not permit allocation     interest and/or penalty, tax due payment must be made 
to states or if the accounting procedures do not reflect         on or before the 15th day of the 4th month following the 
states of utilization, the copyright is utilized in the state in close of the corporations tax year, regardless of having 
which the taxpayer’s commercial domicile is located.             an extension to file.

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       Financial Institutions                                  ACA 26-51-426 adopted Internal Revenue Code Sections 
                                                               582, 585, and 593 as in effect January 1, 1999 regarding 
                                                               bad debts of financial institutions.
Generally, the receipts factor is a fraction; the numerator 
is the financial institution’s gross receipts in Arkansas      Act 822 of 2019 amends ACA 26-5-101, Article IV, 26-51-
during  the taxable  year, and the denominator  is all         709 through 26-51-1405 to provide for a single sales factor 
gross receipts that the financial institution derives from     to apportion income from within and without Arkansas for 
transactions and activities in the regular course of its       tax years beginning on or after 01/01/2021.
trade or business.Interest from loans secured by real 
property  is attributed to  Arkansas  if the property  is      ACA 26-51-1401 requires that a financial institution whose 
located in Arkansas. Interest from loans not secured by        business activity is taxable both within and without this 
real property is attributed to Arkansas if the borrower        State to allocate and apportion its net income  to this 
is located in  Arkansas. Interest from credit cards            State. All business income  which  is includable  in the 
receivables  and fees charged  to card holders  are            apportionable income tax base shall be apportioned to 
attributable to Arkansas if the billing address of the card    this State by multiplying such income by the taxpayer’s 
holder is in Arkansas. Net gains from the sale of loans        receipts factor as described in ACA 26-51-1403.
and loan servicing fees are sourced in the same manner 
as the loan interest. Net gains from the sale of credit 
card receivables are sourced in the same manner as the 
interest on credit card receivables. Interest, dividends, 
and net gains from investment and trading assets and 
activities are attributed to Arkansas if such receipts are 
property assigned to a regular place of business of the 
taxpayer within Arkansas. 

In general, all state and national banks, savings and loan, 
building and loan associations, or any other entity operating 
as financial institutions are to be taxed under existing law. 
For a complete definition of “financial institution”, refer to 
ACA 26-51-1402.

Who Must File

1) A financial institution having its principal office in this 
   State shall be taxed as a business corporation
   organized and existing under the laws of this State, or 

2) A  financial  institution  having  its  principal  office 
   outside this State but doing business in this State 
   shall be taxed as a foreign business corporation doing 
   business in this State.

This is not intended to recognize the right of a foreign 
financial institution to conduct any business in this State 
except to the extent and under the conditions permitted 
by any acts or any other now existing applicable laws of 
this State.  

ACA 26-51-702 requires any taxpayer having income 
from business activity which is taxable both within and 
without this state, other than activity as a public utility or 
the rendering of purely personal services by an individual, 
shall allocate and apportion their net income.

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         Business Incentive                                     minimum investment and payroll requirements  depend on 
                                                                the county in which the business is located. Any unused 
             Tax Credits                                        credits may be carried forward for nine (9) tax years. The 
                                                                ArkPlus tax credits taken during any tax year shall not 
                                                                exceed fifty percent (50%) of the business’s income tax 
1. Purchase of Waste Reduction, Reuse, or 
                                                                liability resulting from the project or facility. 
Recycling Machinery or Equipment

                                                                The ArkPlus incentive may be awarded by AEDC as an 
ACA 26-51-506 provides an income tax credit equal to 30% 
                                                                optional income tax credit or sales tax credit to technology 
of the cost of approved waste reduction, reuse, or recycling 
                                                                based businesses that create a new payroll of at least $250,000 
machinery and equipment including the cost of installation. 
                                                                and pays wages at least 175% of the state or county average 
No other credit or deductions except normal depreciation 
                                                                hourly wage. The credit is between 2% and 8% of the total 
may be claimed on that equipment. Any unused credit 
                                                                investment based on the total amount invested. Depending 
may be carried forward for the next three (3) succeeding 
                                                                on the average hourly wage, the credits earned may be used 
tax years or until exhausted, whichever occurs first. Act 
                                                                to offset 50%, 75%, or 100% of the tax liability. Any unused 
1476 of 2013 also extends the waste reduction, reuse, or 
                                                                credits may be carried forward for nine (9) tax years.
recycling equipment tax credit to carry forward for a period 
of fourteen (14) consecutive tax years following the taxable 
                                                                Act 327 of 2019 provides for projects approved after July 
year in which the credit originated for the Big River Steel 
                                                                24, 2019, that average hourly wages must exceed 150% of 
Mill project. Income tax credits that would otherwise expire 
                                                                the lesser of state or county average hourly wage to qualify 
during that period shall be claimed first. 
                                                                for the credit.  The credit may offset 50% of the income tax 
                                                                or sales tax liability if wages exceed 150% of  the lesser of 
                                                                state or county average hourly wage.  The credit may offset 
2. Consolidated Incentive Act 182 of 2003 
                                                                75% of the income tax or sales tax liability if wages exceed 
                                                                175% of  the lesser of state or county average hourly wage.  
Advantage Arkansas Income Tax Credit                            The credit may offset 100% of the income tax or sales tax 
ACA 15-4-2705 provides an income tax credit for creating        liability if wages exceed 200% of  the lesser of state or county 
new jobs after the company signs a financial incentive          average hourly wage.
agreement with the Arkansas Economic Development 
Commission. The annual payroll of the new employees             Act 911 of 2021 amends ACA 15-4-2703 and 15-4-2706 to 
must meet the payroll threshold for the county in which         allow project costs to be incurred within 6 years from the date 
the business is located. The income tax credit earned is        the incentive agreement was approved instead of the current 
a percentage of the annual payroll of the new full-time         4 years. Credits earned because of costs incurred more than 
permanent employees for a period of five (5) tax years.         4 years after the incentive agreement is approved may not 
Unused credits may be carried forward for nine (9) tax          be claimed until on or after 07/01/2023, and the maximum 
years. The Advantage Arkansas job creation credit cannot        credits for each qualified applicant may not exceed $750,000 
offset more than 50% of a business’s income tax liability.      per fiscal year.

Act 327 of 2019 provides that to qualify for Advantage          Research & Development with Universities Tax Credit
Arkansas credits beginning on or after July 24, 2019, the 
business must pay average hourly wages at least equal           ACA 15-4-2708(a) authorizes a business that contracts 
to the greater of the average hourly wage of the county in      with  Arkansas colleges  or universities  in performing 
which the facility is located, or $12.50 per hour.  A qualified research to qualify for an income tax credit as authorized 
business may receive an additional tax credit of 1% of          by ACA 26-51-1102(b) equal to 33% of qualified expenses. 
qualifying wages if the average hourly wage is at least         A business must submit an application to AEDC and the 
equal to 125% of the lesser of the average hourly wage          Arkansas Science and Technology Authority must also 
for the county or state in which the business locates or        approve the plan. The credit may offset 100% of the tax 
expands.                                                        liability and unused credits may carry forward nine (9) 
                                                                tax years.
ArkPlus Income Tax Credit
                                                                ACA 26-51-1101 (2)(C) allows an income tax equal to 33% 
ACA 15-4-2706(b) allows the AEDC to provide a 10%               of a cash donation that is used by a qualified educational 
income tax credit to eligible businesses based on the total  institution in Arkansas to purchase new machinery and 
investment in a new location or expansion project after         equipment in connection with a qualified education or 
signing a financial incentive agreement with AEDC. The          research program. Taxpayers must submit an application 
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to the Arkansas Economic Development Commission on wages that are in excess of 150% of the state or county
forms prescribed by the Commission and if approved have average wage and meet requisite payroll and investment
itemized receipts documenting the amount of the cash thresholds. The credits may be sold upon approval by the
donation and the purchase costs of the new machinery AEDC.
and equipment. The credit may offset 100% of the tax
remaining after all other credits and any unused credits The buyer of the tax credit shall be allowed the remaining
may be carried forward for nine tax years. carryforward of the tax credit. Any unused credits may be
carried forward for a maximum of nine (9) tax years. The
In-House Research Income Tax Credit tax credit is equal to 10% of its annual payroll, with a cap
of $100,000 per year. The incentive may be offered for a
ACA 15-4-2708(b) authorizes an income tax credit to period not to exceed five (5) tax years.
businesses that conduct “in-house” research. The credit
allowed for approved in-house research is 10% of qualified To claim the credits authorized under the Consolidated
expenditures. However, the maximum credit that can be Incentive Act, attach to the tax return a copy of the
earned by each business is $10,000 per tax year and is Certificate of Tax Credit issued by Tax Credits/
equal to 20% of qualified expenses. The income tax credit Special Refunds Section. For information regarding
may offset 100% of the income tax liability. Unused credits application to any of the incentives under this Act
may be carried forward for nine (9) tax years. contact Arkansas Economic Development at (501)
682-1121 or their website at http://arkansasedc.com.
In-House Research by Targeted Business income Tax
Credit
3. Equity Investment Incentive Credit
ACA 15-4-2708(c) provides income tax credits for
businesses deemed by the AEDC to fit within the six (6) Act 164 of 2015 amends ACA 15-4-3305 to provide tax
business sectors classified as “targeted businesses”. An credits for entities investing in eligible businesses and
eligible business may be approved for an income tax credit purchases the qualified business in calendar years 2007-
each year equal to 33% of the qualified research and 2028. The credit shall not exceed 33.33% of the actual
development expenditures incurred each year for the first purchase price paid for the equity interest and shall not
five (5) tax years of the financial incentive agreement. The exceed 50% of the state income or premium tax liability.
income tax credit for research and development earned The total amount of credits available to all purchasers of
by targeted businesses may be sold. The business must equity interest in a qualified business shall not exceed
make application to AEDC within one year of issuance and $6,250,000. Any unused credit may be carried forward for
the credits may only be sold one time. Any unused credits a period of nine (9) tax years and in no event be carried
may be carried forward for nine (9) years. past December 31, 2037. The application must be filed
with AEDC.
In-House Research in Area of Strategic Value Tax
Credit Act 537 of 2019 amends Arkansas Code Annotated 15-
4-3305(g) to clarify that an equity investment incentive
ACA 15-4-2708(d) authorizes an income tax credit equal credit may be sold only 1 time at any time before the credit
to 33% of qualified research expenditures for an Arkansas is exhausted or expires.
taxpayer that invests in:(A) In-house research in an area
of strategic value; or (B) A project under the research and
development programs approved by the state of Arkansas 4. Child Care Facility
Science and Technology Authority. The taxpayer must apply
to AEDC in order to qualify for the income tax credit. The tax ACA 26-51-507 provides an income tax credit of 3.9% of
credit may be earned for the first five (5) tax years following the the annual salary of employees employed exclusively in
signing of a financial incentive agreement. The maximum tax providing child care services if the revenue to the business
credit that may be claimed by a taxpayer under this program does not exceed the direct operating costs of the facility.
is $50,000 per tax year. Any unused credits may be carried Certification of eligible childcare facilities must be made by
forward nine (9) tax years. the Division of Childcare and Early Childhood Education.

Targeted Business Payroll Income Tax Credit ACA 26-51-508 provides that a business which qualifies
for the refund of the Gross Receipts Tax or Compensating
ACA 15-4-2709 provides income tax credits to “targeted Use Tax under ACA 26-51-516 or ACA 26-53-132 shall be
businesses” approved by AEDC. Companies must pay allowed an income tax credit of 3.9% of the annual salary
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of its employees employed exclusively in providing child      Act 875 of 2021 amends ACA 26-51-1005 for tax years 
care service, or a $5000 income tax credit for the first tax  beginning on or after 01/01/2021 to provide that the income 
year the business provides its employees with a child care  tax credit is equal to the lesser of 50% of the project cost 
facility. This credit is for a business which operates a child  incurred or $120,000. The amount of tax credit shall not 
care facility for its employees only. Any unused credit may  exceed the lesser of the amount of individual or corporate 
be carried forward for the next two (2) succeeding tax years  income tax otherwise due or $18,000.
or until exhausted, whichever occurs first.
                                                              b)  Surface Water Conversion: 
                                                                   
5. Water Resource Conservation                                1.  Outside Critical Areas - ACA 26-51-1007 provides 
                                                                   an income tax credit that shall not exceed the lesser 
All water resource conservation credits must be                    of 10% of the project cost incurred or $27,000 for 
approved  by  the  Arkansas  Natural  Resource                     the reduction of ground water use by substitution 
Commission.                                                        of surface water for water used for industrial, 
                                                                   commercial, agricultural or recreational purposes. 
Act  1073  of  2019 provides that Water Resource                   The credit shall not exceed the lesser of individual 
Conservation credits may be transferred for tax years              or corporate income tax otherwise due or $9,000 
beginning on or after January 1, 2020.  The transferor must        per project and any unused credit may be carried 
provide documentation of the transfer to the Department of         forward for the next two (2) succeeding tax years or 
Finance and Administration within 30 days of the transfer.         until exhausted whichever occurs first. 
The transferor of a credit is liable for the repayment of the 
credit if the transferor fails to complete and maintain the        Act 875 of 2021 amends ACA 26-51-1007 for tax 
project as required under Arkansas Code Ann. 26-51-1011.           years beginning on or after 01/01/2021 to provide 
                                                                   that the income tax credit is equal to the lesser of 
Act 563 of 2021 amends ACA 26-51-1101(c)(1) to allow               25% of the project cost incurred or $35,000. The 
water conservation projects receiving certificates of tax          amount of tax credit shall not exceed the lesser of 
credit approval on or after 01/01/2017 five years to complete      the individual or corporate income tax otherwise 
a project instead of the previous three year requirement.          due or $18,000. Any unused credits may be carried 
                                                                   over for a maximum of 15 consecutive tax years or 
Act 875 of 2021 amends ACA 26-51-1013 to state that                until exhausted, whichever occurs first.
when  the total amount  of tax credits  used  under  this 
subchapter exceeds $20,000,000 in any calendar year,                                 ACA 26-51-1008 provides an 
                                                              2.  Within Critical Areas - 
                                                                   income tax credit not to exceed the lesser of 50% 
the tax credits established under the subchapter shall 
                                                                   of the cost incurred or $27,000 for the reduction of 
expire on December 31 of the following calendar year.
                                                                   groundwater use by substitution of surface water for 
                                                                   water used for agricultural or recreational purposes. 
(a)  Water Impoundment outside and within critical areas: 
                                                                   The credit shall not exceed the lesser of income tax 
                                                                   otherwise due or $9,000 for projects using water for 
                                                                   agricultural or recreational purposes. For industrial 
Act 1125 of 2017 amends ACA 26-51-1005 to provide an 
                                                                   or commercial projects, there shall be allowed a 
income tax credit equal to 50% of the cost of construction 
                                                                   tax credit to each approved applicant not to exceed 
and installation or restoration of water impoundments or 
                                                                   the lesser of 50% of the project cost incurred or 
water control structures of twenty (20) acre-feet or more 
                                                                   $1,000,000. The amount of tax credit allowed is 
designed for the purpose of storing water to be used for 
                                                                   the amount of individual or corporate income tax 
agricultural, commercial or industrial purposes. The credit 
                                                                   otherwise due or $200,000 If the approved applicant 
shall not exceed the lesser of 50% of the project cost 
                                                                   is a pass-through entity the amount of tax credit that 
incurred or $90,000.
                                                                   may be used for a taxable year shall not exceed 
                                                                   the lesser of the aggregate amount of individual 
The  amount of  tax  credit  allowed to  each approved 
                                                                   or corporate income tax due by all members or 
applicant per project shall not exceed the lesser of the 
                                                                   $9,000.“Critical  areas”means those areas so 
amount of individual or corporate income tax otherwise due 
                                                                   designated  by the Arkansas Natural Resources 
or $9,000. Any unused credit may be carried forward for the 
                                                                   Commission.
next fifteen (15) succeeding tax years or until exhausted, 
whichever occurs first. After March 12, 2001, projects used 
                                                                   For projects approved on or after August 1,1997and 
for commercial purposes can qualify for this credit. 
                                                                   using water for industrial or commercial purpose any

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unused credit may be carried forward for the next four 6. Equipment Donation, Sale Below Cost or
(4) succeeding tax years or until exhausted, whichever Qualified Research Expenditure & Research
occurs first. Park Authority

Act 875 of 2021 amends ACA 26-51-1008 for tax years ACA 26-51-1102 provides an income tax credit for a
beginning on or after 01/01/2021 to change the definition taxpayer who donates or sells below cost new machinery
of within critical groundwater areas to include counties or equipment to a qualified educational institution, or a
contiguous to counties with areas designated as critical taxpayer who has qualified research expenditures under
groundwater areas. It also provides that the income tax a qualified research program. This credit is equal to 33%
credit for an agricultural or recreational project is equal to of the cost of the donation, sale below cost, or qualified
the lesser of 50% of the project cost incurred or $35,000. expenditure, and the credit may offset 100% of the net
The amount of tax credit shall not exceed the lesser of income tax liability. Any unused credit may be carried
the amount of individual or corporate income tax due or forward for the next nine (9) succeeding tax years or until
$18,000. Any unused credits may be carried over for a exhausted, whichever occurs first.
maximum of 15 consecutive tax years or until exhausted,
whichever occurs first. Act 203 of 2019 provides for an income tax credit equal
to 33% of cash donations made to a qualified educational
(c) Land Leveling for Water Conservation: institution for the purpose of purchasing machinery and
equipment. The Act is effective July 24, 2019. To qualify
ACA 26-51-1009 provides an income tax credit equal to for the credit for cash donations, an application must
10% of the project cost incurred or $27,000 for agricultural be filed with and approved by the Arkansas Economic
land leveling to conserve irrigation water. The credit shall Development Commission. The taxpayer must obtain
not exceed the lesser of the amount of individual or documentation from the qualified educational institution
corporate income tax otherwise due or $9,000 per project. showing the amount of the donation and document the
Any unused credit may be carried forward for the next two amounts spent purchasing machinery and equipment.
(2) succeeding tax years or until exhausted, whichever
occurs first. ACA 14-144-311 authorizes the creation and operation
of research park authorities for the purpose of economic
Act 875 of 2021 amends ACA 26-51-1009 for tax years development, exempting the property of each research
beginning on or after 01/01/2021 to provide that the tax park authority from all state, county and municipal taxes
credit shall not exceed the lesser of 25% of the project cost including income tax, inheritance tax and estate tax. The
incurred or $35,000. The amount of tax credit shall not act allows contributions to research park authorities to
exceed the lesser of the amount of individual or corporate qualify for the credit provided by ACA 26-51-1102.
income tax otherwise due or $18,000. Any unused credits
may be carried over for a maximum of 15 consecutive tax
years or until exhausted, whichever occurs first. 7. Workforce Training Credit

(d) Wetland and Riparian Zone Creation and Restoration ACA 6-50-702 permits an income tax credit based on a
and Conservation Tax Credits Act: portion of the cost of workforce training. If the training is in
an Arkansas state supported educational institution, the
ACA 26-51-1505 allows the Wetland and Riparian Zone credit allowed is the lesser of one-half (1/2) of the amount
Creation and Restoration Tax Credit amount not to exceed paid by the company or the hourly training cost up to $80
$50,000 and shall equal 50% of the fair market value of the per instructional hour for tax years prior to 2014 to increase
qualified property interest donation, calculated to exclude to $100 per hour for tax years beginning on or after January
any short term capital gain under 26 U.S.C. 170(e)(1)(A) 1, 2014. If training is by company employees or company
as in effect on January 1, 2009. The amount of credit shall paid consultants, the tax credit cannot be more than $25
be equal to the project costs not to exceed the lesser of per hour. There is no carryforward period for this credit.
income tax due or $5,000. An eligible donor may earn only Applications for this credit are available from the AEDC
one Wetland and Riparian Zone Conservation Tax Credit at (501) 682-7675.
per income tax year. The availability of the tax credits shall
st
expire on December 31 of the calendar year following
the calendar year the tax credits used exceed $500,000.
Any unused credit may be carried forward for a maximum
of nine (9) consecutive taxable years.

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8. Tourism Development Credit 12. Public Road Improvement

ACA 15-11-509 provides an income tax credit equal to 4% ACA 15-4-2306 provides a tax credit for those taxpayers
of the payroll of the new full-time permanent employees who contribute to the “Public Roads Incentive Fund” for
working at a tourism attraction project. To be counted as the improvement of public roads. The credit is limited to
a new full-time permanent employee for the purpose of 33% of the total contributions made to the fund and in any
qualifying for the tax credit, the employee in the position tax year is limited to 50% of the net Arkansas tax liability
must have been an Arkansas taxpayer during the year after all other credits have been taken. Any unused credit
in which the credit was earned. For projects receiving can be carried forward for the next three (3) succeeding
approval after March 1,1999, the credit may be applied tax years or until the credit is exhausted, whichever occurs
against the approved company’s income tax liability for the first. This program is administered by the AEDC.
succeeding nine (9) tax years or until exhausted, whichever
occurs first. Act 628 of 2021 amends ACA 15-4-2306(b) to allow
the credit to offset 100% of the tax liability for tax years
beginning on or after 01/01/2020.
9. Apprenticeship Program

Act 1042 of 2017 amendsACA 26-51-509 to provide an 13. Low Income Housing Credit
income tax credit of $2,000, or 10%, of the wages earned
by a youth apprentice (whichever is less) to a business ACA 26-51-1702 provides an income or premium tax
participating in the United States Department of Labor credit for a taxpayer owning an interest in a qualified low
apprenticeship program. The credit may not exceed the income building which is approved through the Arkansas
income tax otherwise due and shall not exceed $10,000 Development Finance Authority. The tax credit is computed
per year for each corporation. Any unused credit may be by multiplying the Federal Low Income Housing Tax Credit
carried forward for the next two (2) succeeding tax years for the qualified project by 20%.The credit may not exceed
or until exhausted, whichever occurs first. Arkansas Code $250,000, or the income or annual premium tax otherwise
Title 26, Chapter 51, Subchapter 16 is repealed. due. Any unused credit may be carried forward for the next
five (5) succeeding tax years or until exhausted, whichever
occurs first.
10. Tuition Reimbursement Credit

ACA 26-51-1902 permits an income tax credit equal to 14. Purchase of Equity in a Capital Development
30% of the cost of tuition reimbursed by the employer to Company
a full-time permanent employee on or after July 30, 1999.
The credit cannot exceed 25% of the business’ income ACA 15-4-1026 allows the original purchaser of an equity
tax liability in any one tax year and has no carryforward interest in a Capital Development Company in calendar
provision. The employee must attend a qualified Arkansas years 2003-2015 to be entitled to an income or annual
institution. Form AR1036 must be attached to the Arkansas premium tax credit equal to 33.33% of the actual purchase
return in addition to Form AR1100BIC to claim this credit. price, limited to 50% of the net Arkansas income or premium
tax liability in any one tax year. No capital development
company shall enter into an agreement or commitment
11. Family Savings Initiative Credit for the purchase by any person of equity interests in the
capital development company on or after July 1, 2007.
ACA 20-86-109 creates the Family Savings Initiative Act, Any unused credit may be carried forward for the next
which provides a tax credit to those taxpayers who make succeeding tax year and annually thereafter for a total of
contributions to a designated fiduciary organization eight (8) years succeeding the year in which the equity
created pursuant to this act. The fiduciary will notify the interest was purchased or until exhausted, whichever
Department of Human Services of the deposits which will occurs first. In no event may the credit be allowed for any
issue a certificate to be attached to the tax return for the first tax year ending after December 31, 2021.
year the credit is taken. The credit allowed is the lesser of
the income tax due or $25,000 per taxpayer. The total tax
credit allowed for all taxpayers is $100,000 per year. Any
unused credit may be carried forward for the next three
(3) succeeding tax years or until exhausted, whichever
occurs first.
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15. Affordable Neighborhood Housing Tax 19. Delta Geotourism Incentive Act
Credit
The Delta Geotourism Incentive Act of 2007 as amended
ACA 15-5-1301 et seq. provides an income or annual allows an income tax credit equal to 25% of an investment
premium tax credit for any business firm engaged in of up to $250,000 in a geotourism supporting business,
providing affordable housing which is approved through the a tourism attraction, or tourism supporting business
Arkansas Development Finance Authority. The tax credit project that attracts out of state visitors in an economically
is limited to 30% of the total amount invested in affordable distressed area of the Lower Mississippi River Delta in
housing assistance activites. The credit may not exceed Arkansas. Applications’ must be made to the Tax Credits
$750,000, or the income or premium tax otherwise due Section of the Department of Finance and Administration
in any taxable year. Any unused credit may be carried and must also be approved by the Arkansas Department of
forward for the next five (5) succeeding tax years or untiol Parks and Tourism. The credit may be transferred to another
exhausted, whichever occurs first. tourism related business in Arkansas upon approval by
DFA and Parks and Tourism. The minimum investment to
qualify for the credit is $25,000 and a transferee of a credit
16. Coal Mining Tax Credit must invest a minimum of $100,000 in a tourism related
business project in Arkansas. Unused tax credits may be
ACA 26-51-511 provides an income or annual premium tax carried forward five (5) taxable years after the year the
credit of $2.00 per ton of coal mined, produced, or extracted credit is earned or until exhausted, whichever occurs first.
on each ton of coal mined in Arkansas in a tax year. An The credit expires and no credit may be established for a
additional credit of $3.00 per ton will be allowed for each tax year ending after December 31, 2021. The amount of
ton of coal mined in Arkansas in excess of 50,000 tons in credit that may be used by a taxpayer for any taxable year
a tax year. The credit can only be earned if the coal is sold shall not exceed twenty-five thousand dollars ($25,000).
to an electric generation plant for less than $40.00 per The credit expires and no credit may be established for a
ton excluding freight charges. The credit expires five (5) tax tax year ending after December 31, 2021. The amount of
years following the tax year in which the credit was earned. credit that may be used by a taxpayer for any taxable year
shall not exceed twenty-five thousand dollars (25,000.00).

17. Venture Capital Investment Credit
20. Arkansas Historic Rehabilitation Income
ACA 15-5-1401 et seq. provides an income tax credit up Tax Credit
to $10 million per fiscal year as recommended by the
Arkansas Development Finance Authority and approved ACA 26-51-2201 creates a credit for income taxes or
by the State Board of Finance. The credit may not exceed premium taxes for qualified historic rehabilitation expenses
the income tax otherwise due and is non-refundable. Any in an amount equal to 25% of the total cost incurred by a
unused credit may be carried forward for five (5) succeeding person, firm or corporation subject to state income tax or an
tax years after the tax year in which the credit was first insurance company paying annual premium tax to complete
earned. a certified rehabilitation project up to the first $500,000 of
expenses on income producing property or $100,000 on
nonincome producing property. The minimum investment
18. Rice Straw Tax Credit to obtain the credit is $25,000. Historic rehabilitation credits
are approved by the Department of Arkansas Heritage.
ACA 26-51-512 allows an income tax credit in the amount The maximum tax credits that may be approved in one
of $15.00 for each ton of rice straw over 500 tons that is year is $4,000,000. The credit may offset 100% of income
purchased by an Arkansas taxpayer who is the end user of or annual premium tax due. Any unused credit may be
the straw (person processing, manufacturing, generating carried forward for five (5) tax years or until exhausted.
energy or producing ethanol). The amount of the credit
is limited to 50% of the income tax due for the tax year. The Arkansas Historic Rehabilitation tax credit program
Any unused credit may be carried forward for ten (10) expires for tax years ending on or before December 31,
consecutive tax years following the tax year the credit 2027. The holder of rehabilitation tax credits may sell or
was earned and is effective for tax years beginning on or assign all or a portion of unused credits by notifying the
after January 1, 2006. Department of Arkansas Heritage and the Department
of Finance & Administration if the credit is an income tax
credit.

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Act 393 of 2017 increases the maximum costs eligible for interest in blues, rock and roll, country and country music
the historic rehabilitation credit to $1,600,000 for projects throughout the Arkansas Delta. Taxpayers must apply for
starting on or after July 1, 2017. Act 470 of 2019 reduces the credit with the Arkansas Delta Music Commission and
the minimum investment necessary for non-income the commission may not approve more than $250,000
producing properties to $5,000 for tax years beginning of expenses in any one calendar year. The credit may
on or after January 1, 2019. offset 100% of the tax due and unused credits may be
carried forward up to five tax years.
Act 855 of 2019 provides for a Major Historic Rehabilitation
Credit equal to 25% of qualified rehabilitation incurred by
the owner to complete a certified rehabilitation approved 23. Arkansas Wood Energy Products and
by the Department of Arkansas Heritage. The minimum Forest Maintenance Credit
investment for the credit is $1,500,000. The Department
of Arkansas Heritage may charge an application fee of Act 594 of 2021 provides for an income tax credit equal
up to 1% of the amount of the credit and may charge to 30% of the cost of qualifying equipment with a minimum
a fee of 0.75% of the amount of any credit transferred. investment in excess of $50 million required in a project
Applications for the credit must be made between July 1, approved by the Arkansas Economic Development
2020 and June 30, 2025. Commission with a signed economic incentive agreement.
Each project must create at least 100 new full-time jobs
Act 840 of 2021 amends ACA 26-51-2204 to increase the with an average salary of $60,000 per year. Up to $5
maximum tax credits that may be approved in one year million of the credit may be claimed each year, and the
from $4 million to $8 million per fiscal year beginning with State of Arkansas may purchase the tax credits at 80%
fiscal year 2022. of face value. Unused credits may be carried forward in
perpetuity until fully claimed. Act 594 is effective for tax
years beginning on or after 01/01/2021.
21. Arkansas Central Business Improvement
District Rehabilitation and Development
Investment Tax Credit 24. Motion Picture Credit

ACA 26-51-2407 amends Arkansas Code 26, Chapter Act 797 of 2021 provides for a rebate or tax credit for
51 to add Subchapter 24 to establish an investment approved film projects. The income tax credit or rebate
tax credit equal to 25% for a qualified rehabilitation or is equal to 20% of all qualified production and post-
development expenditure incurred for a qualified project production costs for an approved project that spends
up to the first $500,000 on income producing property at least $200,000 in a six month period. An additional
or $200,000 on non-income producing property with a 10% of payroll costs for full-time Arkansas residents, or
minimum investment of $30,000. The total credit will be veterans, or veteran owned small businesses is allowed.
issued for up to $1,000,000 in any one fiscal year on a first The credit is limited to the first $500,000 of a highly
come, first serve basis. The credit may be transferred, compensated individual’s salary. The Arkansas Economic
sold, or assigned only one (1) time and will offset up to Development Commission shall not approve more than
100% of the state income tax due. Any unused tax credit $4 million in motion picture tax credits in any fiscal year.
may carryforward for five (5) consecutive taxable years or Unused credits may be carried forward for 5 tax years,
until exhausted, whichever occurs first. This act will take and unused credits may be transferred.
effect only if the Chief Fiscal Officer of the State certifies
that sufficient funds are available. The credit will not be
funded for tax year 2018. If it is determined that funding is 25. Steel Specialty Products Manufacturing
available, the act will be effective for tax years beginning on Credit
or after January 1 of the year following the certification and
continue for a period of two (2) years. Act 895 of 2021 amends ACA 26-51-506 to provide a tax
credit equal to 30% of the cost of equipment including
installation costs for an approved project that invests
22. Delta Music Trail Credit in excess of $200 million and employs at least 150
employees with an average salary of at least $75,000
Act 1066 of 2019 provides for an income tax credit per year. The maximum credit that may be claimed is
equal to the lesser of 100% of the cost or $25,000 for $4 million if the total investment is $200 million to $275
an art project that promotes awareness and encourages million, $5 million if the total investment is $275 million
enjoyment of the stories, biographies, and points of to $350 million, and $6.5 million if the investment is at
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least $350 million. The State of Arkansas has the option tion purposes, the taxpayer claiming the credit
to purchase the credits for 80% of face value. If the State should attach a copy of the approved transfer
fails to purchase credits the taxpayer or a transferee may document to the return claiming credit.
carry forward unused credits for 3 tax years. The act is
effective for tax years beginning on or after 01/01/2021.

26. Philanthropic Investment in Arkansas Kids
Scholarship Program Credit

Act 904 of 2021 provides for a tax credit equal to 100%
of the eligible contributions to a scholarship granting
organization. Total tax credits awarded shall not exceed
$2 million per calendar year, and unused credits may be
carried forward for 3 tax years. Tax credit applications
must be submitted to and approved by the Tax Credits
and Special Refunds Section of the Department of
Finance & Administration. The act is effective for tax
years beginning on or after 01/01/2022.

27. Railroad Modernization Tax Credit

Act 967 of 2021 provides a tax credit for Class II and
Class III railroad track maintenance. The credit is equal
to 50% of railroad track maintenance expenditures up to
$5,000 per track mile. The credit claimed may not exceed
the tax liability, and unused credits may be carried forward
up to 5 tax years and may be transferred. Maintenance
projects must be approved by the Department of
Commerce before expenditures are incurred. Certification
of the tax credits is issued by the Department of Finance &
Administration. The act is effective for tax year beginning
on or after 01/01/2021.

The Business and Incentive Tax Credit forms
and instructions may be obtained from:

Department of Finance and
Administration Tax Credit/Special
Refunds Section
P O Box 1272
Little Rock, AR 72203-1272
or call (501) 682-7106
website: www.dfa.arkansas.gov

NOTE: On any credit issued to a taxpayer that is
sold/ transferred to another taxpayer, the own-
er of the credit must contact the issuing agency
and request a Transfer Document. The issuing
agency will send a copy of the approved trans-
fer documents to the Tax Credit Section upon
completion of the sale/transfer. For verifica-
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