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             ARKANSAS

                  2021

C 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 Corporation Income Tax Section
Friday 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
Tax Information Office (Offers In Compromise) to prepare your return.

Internal Revenue Service ............... (800) 829-1040 No appointment is necessary, but plan to arrive before
Social Security Administration ........ (800) 772-1213 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, Little Rock, AR 72201
Forms
Office hours are Monday through Friday from 8:00 a.m. to
4:30 p.m.
To obtain a booklet or forms you may:

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 2021....................................................................................................... 4-7

Important Reminders for 2021........................................................................................8-10

Instructions:

Domestic and Foreign Income Tax General Instructions..............................................11-13
Specific Line Instructions, AR1100CT Return..........................................................14-16
Income from Sources Within and Without the State Instructions.............................17-22

Financial Institutions..........................................................................................................23
Business Incentive Tax Credits. ................................................................................. 24-31
Exempt Organizations and Subchapter S. .................................................................... 32-33

Tax Tables. .................................................................................................................. 34-35

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WHAT’S NEW for 2021

NOTE: The following is a brief description of each Act and is not intended to replace a careful reading of
the Act in it’s entirety. The Arkansas Legislature enacted numerous changes to the Arkansas Tax
Code in 2019. However, many of those changes are not effective until future tax years.

Federal Tax Changes adopted in the 2020 Cares Act can only be adopted for Arkansas if the Arkansas
Legislature adopts them in the 2021 Legislative Session.

Act 822 of 2019 amends Arkansas Code Annotated 26-5-101, Article IV and 26-51-709 through 26-51-
718 to provide for a single sales factor to apportion income from within and without Arkansas for tax years
beginning on or after January 1, 2021. For tax years beginning on or after January 1, 2021, all taxpayers
with income from sources within and without Arkansas must use a single sales factor to apportion income
from Arkansas unless the taxpayer is subject to a special industry apportionment method authorized for;

1.Railroads by Regulation 1.26-51-204,
2.Private Railcar Operators by Regulation 2.26-51-204
3.Construction Contractors by Regulation 1.26-51-718(d)
4.Television and Radio Broadcasting by Regulation 2.26-51-718(d)
5.Publishing by Regulation 3.26-51-718(d), and
6.Pipelines by Regulation 6.26-51-718(d).
Airlines are required to use sales factor apportionment only under Regulation 4.26-51-718(d) and Bus Lines and
Trucking Companies are required to apportion using a mileage factor only under Regulation 5.26-51-718(d) and
the mileage should be reported in the sales factor area of Schedule A for Form AR1100CT.
Act 822 also amends Arkansas Code Annotated 26-51-205 to reduce the maximum corporation income tax rate to
6.2% for taxable income that exceeds $100,000 for tax years beginning on or after January 1, 2021. For tax years
beginning on or after January 1, 2022 the maximum tax rate shall be 5.9% for all income exceeding $25,000. The
maximum tax rate for tax years beginning before January 1, 2021 is 6.5% for income exceeding $100,000.
Act 822 amends Arkansas Code Annotated 26-51-427 to allow 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.

Tax Exemptions for certain Economic and Covid-19 related U.S. Government payments

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

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 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 Arkan-
sas Code Annotated 26-51-427(2).

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 any 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, USDA loan subsidies,
3.EIDL Grants under ARPA,
4.PPP loan forgiveness under ARPA,
5.Emergency Rental Assistance under ARPA and the Consolidated Appropriations Act,
6.Arkansas Ready for Business Grants and
7.any other federal, state or local financial assistance program not specifically exempted by Arkansas law.

Other tax law changes affecting Arkansas Corporation Income Tax

Act 143 of 2021 amends Arkansas Code Annotated 26-51-102 to include a definition for tax practitioner and Ar-
kansas 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 145 of 2021 amends Arkansas Code Annotated 26-18-705(b) and allows DFA to waive certificate of indebt-
edness filing fees in addition to the existing authority to waive penalties and interest of a taxpayer under certain 
circumstances.

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 re-
turn. 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 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. 
Form AR362 and vouchers for estimated payments for the Pass-through Entity Tax should be available in January, 
2022. 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 not available for 2021.

Act 563 of 2021 amends Arkansas Code Annotated 26-51-1011(c)(1) to allow water conservation projects receiv-
ing certificates of tax credit approval on or after January 1, 2017 five years to complete a project instead of the 
previous three year requirement.

Act 586 of 2021 creates a new subchapter 11 to Arkansas Code Title 26, Chapter 18 and authorizes an indepen-
dent Tax Appeals Commission to hear administrative appeals of tax assessments and refund denials made by the 
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Department of Finance and Administration. The Commission will begin accepting and trying tax disputes by Janu-
ary 1, 2023.

Act 593 of 2021 details the steps in transition to the independent Tax Appeals Commission.

Act 594 of 2021 creates a new subchapter to Arkansas Code Title 26, Chapter 51 and creates the Arkansas Wood
Energy Products and Forest Maintenance Income Tax Credit. The credit is equal to 30% of the cost of qualifying
equipment with a minimum investment of $50 million required in a project approved by the Arkansas Economic
Development Commission with a signed economic incentive agreement. Each project must create at least 100
new full-time jobs with an average salary of $60,000 per year. Up to $5 million of the credit may be claimed each
year and the State of Arkansas may purchase the tax credits at 80% 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 January 1, 2021.

Act 628 of 2021 amends Arkansas Code Annotated 15-4-2306(b) by allowing the Arkansas Public Roads Improve-
ments Credit to offset 100% of the tax liability instead of the current 50% for tax years beginning on or after January
1, 2020. The credit is equal to 33% of the taxpayer’s contribution to an approved road improvement project.

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.

Act 718 of 2021 amends Arkansas Code Annotated 26-18-507 to allow the Department of Finance to use a refund
due to a taxpayer as payment of an outstanding state tax delinquency of the taxpayer after a final assessment has
been issued for the delinquency.

Act 797 of 2021 amends Arkansas Code Title 15, Chapter 4, and subchapter 20 to allow a rebate or a tax credit
for approved film projects. The income tax credit or rebate is equal to 20% of all qualified productions and post-
productions costs for an approved project that spends at least $200,000 in a six month period. An additional 10% of
payroll costs for full-time Arkansas residents or veterans or to veteran owned small businesses are allowed for the
credit or rebate. The credit is limited to the first $500,000 of a highly compensated individual’s salary. The Arkansas
Economic Development Commission shall not approve more than $4 million in film tax credits in any fiscal year.
Credits exceeding the $4 million annual cap may be approved if the Department of Commerce and the Department
of Finance and Administration jointly approve supplemental credits. Unused credits may be carried forward for 5
tax years after the tax year issued and unused credits may be transferred.

Act 840 of 2021 amends Arkansas Code Annotated 26-51-2204 to increase the annual cap for the Arkansas His-
torical Rehabilitation Tax Credits approved each year from $4 million per fiscal year to $8 million per fiscal year
beginning with fiscal year 2022.

Act 875 of 2021 amends Arkansas Codes Annotated 26-51-1005, 26-51-1007, 26-51-1009 and 26-51-1013 to in-
crease the maximum credits allowed for each water conservation tax credit and increases the carry forward for all
water conservation tax credits to 15 years. See the section of this instruction booklet on Business Incentive Credits
for the specific changes to each water conservation credit type.

Act 895 of 2021 amends Arkansas Code Annotated 26-51-506 to create a new Steel Specialty Products Manufac-
turing Credit equal to 30% of the cost of equipment including installation costs for an approved Arkansas project
that invests at least $200 million and employs at least 150 employees with an average salary of at least $75,000
per year. The maximum credit that may be claimed each year is $4 million if the total investment is $200 million to
$275 million, $5 million if the investment is $275 million to $350 million and $6.5 million if the investment exceeds
$350 million. The State of Arkansas has the option to purchase these credits each year for 80% of face value. If
the State fails to purchase credits the taxpayer or a transferee may carry forward unused credits for 3 tax years.
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Act 904 of 2021 creates a new subchapter 22 to Arkansas Code Title 26, Chapter 18 and creates the Philanthropic
Investment in Arkansas Kids Scholarship Program. The income tax credit is equal to 100% of the contribution to
an eligible scholarship granting organization. Total tax credits 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.

Act 911 of 2021 amends Arkansas Codes Annotated 15-4-2703 and 15-4-2706 to allow project costs for job re-
tention tax credits to be incurred within 6 years from the date the incentive agreement was approved instead of
the current 4 years. Credits earned because of costs incurred more than 4 years after the incentive agreement is
approved may not be claimed until on or after July 1, 2023 and the maximum credits for each qualified applicant
may not exceed $750,000 per fiscal year.

Act 967 of 2021 creates a new subchapter to Arkansas Code Title 26 Chapter 51 and creates the Railroad Mod-
ernization 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 each year may not exceed the tax
liability and unused tax credits may be carried forward up to five tax years and may be transferred. Maintenance
projects must be approved by the Department of Commerce before expenditures are incurred and the certification
of the tax credits shall be issued by the Department of Finance and Administration. Act 967 is effective for tax years
beginning on or after January 1, 2021.

Act 1041 of 2021 repeals the Small Business Entity Tax Pass-Through Act in Arkansas Code Title 4, Chapter 32
and creates the Uniform Limited Liability Company Act in a new Chapter 37 of Arkansas Code Title 4. The Act
specifies that a Limited Liability is classified and taxed in the same manner for Arkansas purposes as it is for Fed-
eral income tax purposes unless it elects to be taxed under the Elective Pass-Through Entity Tax Act, Act 362 of
2021.

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                       IMPORTANT REMINDERS for 2021

Federal Subchapter S Corporations cannot file Arkansas C Returns

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. Federal Subchapter 
S corporations will no longer be allowed to file Arkansas C corporation income tax returns for tax years 
beginning on or after January 1, 2018. 

Multistate Corporations must allocate income from partnerships

Act 482 of 2017 amends ACA 26-51-802(c) to require that Partnership income be determined for state income tax 
purposes by using an apportionment method. Partners will continue to allocate partnership income. Effective for 
tax years beginning on and after January 1, 2018.

Withholding Payments

Form AR1100-WH corresponds with Line 36 on Form AR1100CT for corporations to report withholding tax paid on 
their behalf by partnerships and will need to be included with Form AR1100CT. Corporations claiming withholding 
must attach Form AR1100-WH listing each partnership that withheld tax and a copy of Form AR1099PT from each 
partnership. The partnership must have filed its annual withholding return of Form AR941PT and paid the tax withheld 
before credit for the withholding will be allowed.

Withholding Payments as Reported on Form AR941PT

Act 760 of 2017  amends     ACA 26-51-919(a)(2),(b)(l)(A)(i) (c)(5)(A).  and (d) for the income tax withholding 
requirements for members or owners of a pass-through entity to require withholding on corporate partners and to 
allow corporations to participate in composite returns. Effective for tax years beginning on and after January 1, 2018.

Amended Tax Returns

For tax years beginning on or after January 1, 2010 the AR1100CTX Arkansas Amended Return form was removed. 
An Arkansas Amended Return will be filed on the Form AR1100CT by checking the appropriate box as filing an 
Amended Return. Taxpayers should use Form AR1100CTX for tax years 2009 and prior. A copy of the corporation’s 
Federal Amended Return, or IRS audit report, or an explanation for filing the Arkansas Amended Return must be 
attached to the Form AR1100CT.

Arkansas Form AR1100CT 

To correctly process the Corporation’s return it is essential that every applicable line and space on Form AR1100CT 
and related schedules be typed or printed including tax year, corporation name, address, city, state, zip code, 
telephone number, FEIN (Federal Employer Identification Number), date of incorporation, NAICS business code 
used on the federal return, date began business in Arkansas, and filing status (check one box only). If consolidated 
box 4 is checked, you must also indicate number of entities in Arkansas in the space immediately to the right of 
Filing Status 4 description.

Consolidated filers must complete a Form AR1100CT (with Schedule A if applicable) for each corporate 
entity and a separate Form AR1100CT for the consolidated group. If Filing Status 4 is checked, do not check 
any other filing status box. An Arkansas consolidated group with its members having business activity only within 
Arkansas must check the box for filing Status 4. 

To correctly process Corporate Income Tax payments, use the AR1100ESCT for Estimate payments and AR1100CTV 
for Corporate Income Tax payments. For Composite payments use the AR1000CRES for Estimate payments and 
AR1000CRV for Composite return tax payments.

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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 payments received, view recent account 
activity, and 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 period.

The Arkansas Corporation Income Tax Return must be organized as follows: 

Other than Filing Status 4 Filers:
 Arkansas Form AR1100CT (front) (Must be signed on Schedule A, page 2)
 Arkansas Form AR1100CT Schedule A, if applicable
 Arkansas Schedule of Check-Off Contributions, Form AR1100CO if applicable
 Arkansas approved extension, if applicable
 Arkansas Reconciliation Schedule, Form AR1100REC
 Business Incentive Tax Credit Certificates (originals), if any, Schedule AR1100BIC, if applicable
 All other schedules pertaining to the Arkansas return
 Copy of Federal Return with supporting schedules
Corporations with Filing Status 2 must complete Schedule A (Apportionment Schedule).

Filing Status 4 Filers:
 Arkansas Form AR1100CT (page 1 only) for Group (Must be signed on Schedule A, page 2)
 Arkansas Form AR1100CT for each entity (including parent) within the Group, and Schedule A, if applicable
 Arkansas Schedule of Check-Off Contributions, Form AR1100CO, if applicable
 Arkansas approved extension, if applicable
 Arkansas Reconciliation Schedule, Form AR1100REC
 Business incentive Tax Credit Certificate (original) if any, Form AR1100BIC, if applicable
 All other schedules pertaining to the Arkansas return
 Copy of Federal Return with supporting schedules

Corporations with Filing Status 4 (Consolidated Return) must complete a separate AR1100CT and Schedule A, if 
applicable, for each member with gross income from sources within Arkansas and consolidate the applicable taxable 
income on a Consolidated Group AR1100CT and attach a copy of the Federal return. Each member’s Arkansas 
Business Incentive Tax Credit may be combined to reduce the consolidated group’s total tax liability without separate 
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entity restrictions, except for the Arkansas Economic Development Credit and ArkPlus Credit. Charitable contribution 
limits are calculated on a separate corporation basis for consolidated filers.

All percentages used in determining the apportionment factor on Schedule A must be calculated to 6 places to the 
right of the decimal (example 35.333452%).

Estimated Tax Requirements

ACA 26-51-911(c)(1) and ACA 26-51-913(a)(2) adopt federal due dates for making declarations of estimated 
Arkansas income tax. Arkansas taxpayers are required to file an Estimated Declaration when their liability exceeds 
$1,000. The AR1100ESCT, Estimate Payment Vouchers 1 through 4, and Extension Voucher 5 for tax year 2021 
are not included in these instructions. You will find them at our website, www.dfa.arkansas.gov. Filling the forms 
out online will automatically fill in the taxpayer information and provide the appropriate scan line needed for proper 
processing.

To make sure payments are processed correctly, please use the correct payment voucher. Use the AR1100ESCT 
vouchers for Corporation Income tax payments. For Individual Composite payments use the AR1000CRES vouchers.

ACA 26-19-106 provides that a corporation with an estimated quarterly income tax liability equal to or greater 
than $20,000.00 must pay the estimated quarterly income tax due by electronic funds transfer (Refer to General 
Instructions). Corporations that underestimate their corporate tax liability must calculate any penalty due as 
applicable, on Part 2 of Form AR2220, and enter the penalty amount on page 1, Line 45 of Form AR1100CT. Enter 
the numerical exception from Part 3 in the box on Line 45 if applicable.

If a corporation is required to remit Arkansas estimated corporation income tax payments through the Electronic 
Funds Transfer (EFT) method, ACA 26-19-107 authorizes the assessment of an EFT penalty equal to five percent 
(5%) based on the amount of taxes due. Taxpayers who are required to pay by EFT will be notified in writing by 
the Department. The Form EFT-CT is no longer used to register for EFT payments. You will find current 
instructions at https://www.dfa.arkansas.gov/excise-tax/sales-and-use-tax/electronic-filing-and-payment-
options/ or by calling Excise Tax at (501) 682-7105. 

Copy of Federal Return is Required

ACA 26-51-806 (d)(1) requires a completed copy of the corporation’s Federal Corporate Income Tax Return, Form 
1120, 1120S, or other form, along with all schedules and documents, be attached to the Arkansas “C” Corporation 
Income Tax Return, Form AR1100CT. The Federal return may be submitted by CD, PDF, TIF format, or attached 
in paper form.

Signatures and Verification 

The return must be signed by a corporate officer in the space provided on the bottom of Schedule A, page 2 of 
Form AR1100CT. The return of a foreign corporation having an agent in the State may be sworn to by such agent. 
If receivers, trustees in bankruptcy, or assignees are operating the property or business of the corporation, such 
receivers, trustees, or assignees shall sign the return for such corporation under certification. The return must be 
signed in the space provided on the bottom of Schedule A, page 2 of Form AR1100CT. For consolidated returns, 
only the group Form AR1100CT, Schedule A, page 2, must be signed. Refer to General Instructions.

ACA 26-51-804 (b) provides, the return must be signed by a corporate officer in the space provided on the bottom 
of Schedule A, page 2 of Form AR1100CT.

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                             2021 State of Arkansas
Domestic and Foreign Income Tax General Instructions

Who Must File                                                 A  complete  copy  of  the  Federal  return  must  be 
                                                              attached.A schedule listing each intercompany 
Every corporation organized or registered under the laws      transaction and adjustment, identifying the entity 
of this State, or having income from Arkansas sources         by FEIN to which it applies must be submitted if 
as defined in ACA 26-51-205, must file an income tax          this information is not clearly shown on the Federal 
return. Consolidated returns are permitted under certain      return.
conditions. D.I.S.C and F.S.C. Corporations are treated 
as regular business corporations. Business corporations,      Time For Filing
D.I.S.C, and F.S.C. Corporations should use Arkansas 
Form AR1100CT. Small business “S” corporations must           Arkansas adopted a new due date for Corporate 
use Form AR1100S. A pass-through entity filing as an LLC      Income tax returns for tax years beginning on or 
or Partnership, or a pass-through entity electing to file as  after  January  1,  2016. Arkansas  Corporate  Income 
                                                                                           th             th
a corporation, should check the box on Form AR1100CT.  Tax Returns are now due the 15  day of the 4  month 
(Refer to ACA 4-32-1313 or ACA 26-51-802.)                    following the end of the tax year. This includes short tax 
                                                              years. Cooperative Association returns are due on or 
                                                                         th            th 
Consolidated Returns                                          before the 15  day of the 9 month following the close of 
                                                                                                              th
                                                              the tax year. Exempt organizations are due on the 15  
                                                                       th
All corporations that are eligible members of an affiliated   day of the 5  month. 
group filing a Federal Consolidated corporation income 
tax return may elect to file an Arkansas Consolidated         Extensions of Time for Filing
income tax return. However, only corporations in the 
affiliated group that have gross income from sources          If you have received an automatic Federal extension 
within the State that is subject to Arkansas income           (Form 7004), the time for filing your Arkansas Corporation 
tax are eligible to file consolidated income tax returns      Income Tax Return shall be extended until 30 days 
in Arkansas. An Arkansas consolidated group with its          after the due date of your federal return. When filing 
members having business activity only within Arkansas  the Arkansas Form AR1100CT, check the box at the top 
must check the box for Filing Status 4.                       indicating that the Federal Extension Form 7004 and/
                                                              or Arkansas Extension Form AR1155 has been filed 
In computing Arkansas consolidated taxable income or          and file the Arkansas return on or before the extended 
loss to which the tax rate is applied, the separate net  due date. It is no longer necessary to include a copy of 
income or loss of each corporation that is entitled to be  the Federal Form 7004. To request an initial Arkansas 
included in the affiliated group will be included in the      extension of 180 days from the original Arkansas return 
consolidated net income or loss to the extent that its net  due date or an Arkansas extension of 60 days beyond 
income or loss is separately apportioned or allocated  the automatic federal extension due date, complete and 
to Arkansas. All corporations in the affiliated group that    mail Arkansas Form AR1155 by the federal extended 
are eligible to file an Arkansas Consolidated corporation     due date or, if applicable, the Arkansas extended due 
income tax return must consent to, and join in, the filing    date to the Corporation Income Tax Section. If you have 
of the return prior to the last day for filing. The filing of an automatic federal extension and do not want to 
the consolidated return will be considered as consent of      request an additional 60 day Arkansas extension, 
each eligible corporation in the affiliated group.            you  do  not  fill  out  the  Form AR1155.  Extensions 
                                                              using Form AR1155 are only available for the filing of 
Corporations with Filing Status 4 (Consolidated Return)       original returns. Approved Arkansas extension(s) must 
must complete a separate Form AR1100CT reflecting             be attached to the Arkansas income tax return when it 
taxable income before intercompany eliminations and           is filed. Submit payment with the AR1155 Voucher that 
adjustments,  and  Schedule A,  if  multistate,  for  each  is attached to the form only if you are requesting an 
member with gross income from sources within Arkansas.  Arkansas Extension, unless paying
Each member’s separate net income or loss must be  by EFT method. 
consolidated on a group Form AR1100CT beginning on 
Line 30. Schedule A should not be completed for the           Act 629 of 2021 amends Arkansas Code Annotated 26-
consolidated group, but must be included for signature        51- 807(a) to allow taxpayers an extension to file of one 
by a corporate officer.                                       month after the extended due date for a federal income 

                                                                                                          Page 11

- 12 -

tax return for tax years beginning on or after January 1,     Period Covered
2021. To obtain the one-month additional extension to 
file the return, attach a copy of the requesting document     A taxpayer must calculate their Arkansas income tax 
to the corresponding state income tax return. The one         liability using the same income year for Arkansas income 
month extended due date does not apply to returns for         tax purposes as used for Federal income tax purposes 
which a federal extension is not requested and does           (ACA 26-51-402). Arkansas  Regulation  1.26-51-
not extend the original due date. As a reminder all tax       102(17)(B) states, A fractional part of a year (short tax 
payments are due on the original return due date and          year) means a period of less than twelve (12) months. 
                                                                                                   th
interest at 10% per annum and failure to pay penalties at     If a short tax year ends on or before the 15  day of the 
5% per month will be assessed on all taxes unpaid after       month, then the short tax year shall be deemed to have 
the original due date which is April 15 for calendar year     ended on the last day of the previous month. If a short 
                                                                                          th 
                                                              tax year ends on or after the 16 of the month, then the 
filers and the 15th day of the fourth month after the end 
                                                              short tax year shall be deemed to have ended on the last 
of a tax year that does not end in December.
                                                              day of the current month.
Amended Returns
                                                              Filing Declaration of Estimated Income Tax
For  tax  years beginning  on or after  January 1,  2010 
                                                              Every taxpayer who can expect to owe Arkansas income 
the AR1100CTX Arkansas Amended  Return  form 
                                                              tax in excess of $1,000 must make a declaration and 
was removed. An Arkansas Amended Return will be 
                                                              the timely pay the estimated tax in equal installments. 
filed  on  the  AR1100CT  by  checking  the  appropriate 
                                                              The declaration shall be filed with the commissioner on 
box  as  filing  an  Amended  Return.  Taxpayers  should                th             th
                                                              or before the 15  day of the 4  month of the tax year of 
use AR1100CTX for tax years 2009 and prior. A copy 
                                                              the taxpayer. Taxpayers, whose income from farming for 
of the corporation’s Federal Amended Return, or IRS 
                                                              the tax year can reasonably be expected to amount to at 
audit report, or an explanation for filing the Arkansas 
                                                              least two-thirds (2/3) of the total gross income from all 
Amended  Return must be attached to the AR1100CT.
                                                              sources for the tax year, may file such declaration and 
Arkansas amended returns must be filed within three                                             th       nd
(3) years from date of filing the original return, or two (2) pay the estimated tax on or before the 15  day of the 2  
years from date of payment of tax on the original return,     month after the close of the tax year or the taxpayer may 
whichever is later, except when required to report the final  file an income tax return and pay the tax on or before the 
                                                                th      th
results of an IRS audit. Refund requests must be filed on     15  day of the 4  month after the close of the tax year. 
the amended return. Attach schedules and an explanation       To avoid penalty, all other taxpayers must pay quarterly 
                                                                                       th          th    th
for filing the Arkansas amended return to the AR1100CT.       estimates on or before the 15  day of the 4  month, 6  
                                                                   th          th
If multistate, attach amended apportionment schedule.         month, 9  month and 12  month of the tax year. The Form 
If consolidated, attach separate company amended              AR1100ESCT, Estimate payment vouchers 1 through 4 
AR1100CT with amended apportionment schedule, if              and Extension payment voucher 5 are not included in 
applicable. Interest at 10% per annum will be computed        these instructions. Filling out the forms on our website, 
on a daily rate of .00027397 from the original return due     www.dfa.arkansas.gov,  will  automatically  fill  in  the 
date to date amended return is filed and the tax is paid.     taxpayer information and provide the appropriate scan 
                                                              line needed for proper processing.
Report of Change in Federal Taxable Income
                                                              Corporations may remit estimated and extension 
An agreed Revenue Agent’s Report (RAR) must be                corporation income tax payments through ATAP (Refer 
reported on an amended return using the appropriate           to www.atap.arkansas.gov for instructions).
Form AR1100CT  or AR1100CTX  (refer  to Amended 
Return instructions). The RAR must be reported to this        If the Director determines that a corporation’s estimated 
State within 180 days after the receipt of the RAR or         quarterly Arkansas income tax liability exceeds 
supplemental  report  reflecting  correct  net  income  of    $20,000.00, the corporation is required to pay the 
taxpayer. ACA 26-18-306(b)(1-3) states that a refund          estimated quarterly income tax payments due by 
shall not be paid if the amended return is filed on or after  electronic funds transfer (EFT). The EFT must be made 
       st
the 181  day following receipt of the notice from the IRS.    no later than the day before each quarterly due date. If the 
Any additional tax and interest must be paid with the         corporation timely pays the estimated quarterly income 
amended return or a refund must be requested on an            tax payments by EFT, the corporation is not required to file 
amended return if applicable. Statute of limitations will     a quarterly estimated income tax voucher. If a taxpayer is 
remain open for three (3) years for assessment of tax if      required to submit estimate payments by EFT, a letter will 
a  taxpayer  fails to  disclose  Federal Revenue Agent’s      be sent by DFA notifying the taxpayer of the requirement.
Report.   
Page 12

- 13 -

Accounting Methods                                          regulations, a penalty of 10% of the total amount shall 
                                                            be added.  Any part of any deficiency determined to be 
A taxpayer must calculate their Arkansas income tax         due to fraud shall be subject to a 50% penalty. Interest at 
liability using the same accounting method for Arkansas     the rate of 10% per annum shall be assessed on all tax 
income tax purposes as used for Federal income tax          deficiencies. Interest will be computed using a daily 
                                                                          th                      th 
purposes. If a corporation changes its accounting           rate of .00027397 from the 15  day of the 4 month 
method, attach a copy of any certification or approval      after the close of the tax year until the date the tax 
received from the Internal Revenue Service authorizing      is paid.
the change of accounting method to the corporation’s 
Arkansas return.(ACA 26-51-401).                            Balance Sheets

Payment of Taxes                                            The balance sheet submitted with the return should be 
                                                            prepared from the books and should agree therewith. If 
The tax should be paid by attaching to the return a check   there are any differences between current year beginning 
or money order payable to the order of “Department of       and prior year ending balance sheets, submit a schedule 
Finance & Administration.” Enclose proper payment           of reconciliation with the return. All corporations engaged 
voucher with all remittance checks and write the            in an interstate and intrastate trade or business and 
corporation’s FEIN or CIT account  ID number  and           reporting to the Surface Transportation Board, or to any 
the tax year on the check. Payments with returns    may     national, state, municipal or other public officer, may 
not be made by EFT. Tax due on returns may be paid          submit copies of their balance sheet, prescribed by said 
through ATAP. (Refer  to www.atap.arkansas.gov.) To         Board, national, state or municipal authorities, as of the 
avoid interest and/or penalty the tax must be paid in full  beginning and end of the taxable year.
                                                  th
by the original return due date, which is the 15  day of 
    th
the 4  month after the close of the corporation’s tax year. 
An approved federal and/or state extension, which 
allows the corporation’s return to be filed on or before 
the approved extended due date, does not extend the 
time period to pay the tax due in full. Interest and/or 
penalty will be assessed on any tax due paid after the 
original return due date as referenced above. Payments 
with a return should include the AR1100CTV payment 
voucher for Corporation Income tax payments and the 
AR1000CRV for Individual Income tax.

Penalties and Interest

The following penalties shall be imposed:
(ACA 26-18-208)
 Failure to file timely - 5% per month not to exceed
     35%.
 Failure to make timely remittance - 5% per month not to
      exceed 35%.
 Underestimate penalty - 10% of the amount of the
     underestimate.
 Failure to file return - $50.00.
 Failure to make required EFT payment - 5% of the tax
     due.
 Incomplete electronic payment -10% of the amount
     of the draft or $20.00, whichever is greater.
 Failure to Comply - $50.00.

If any part of any deficiency or tax liability is due 
to  negligence  or  intentional  disregard  of  rules  and 
                                                                                                  Page 13

- 14 -

General Instructions
Specific Line Instructions for Page 1 of AR1100CT Return

Type Return Line 13-Gains or Losses: Enter the total net gain or
loss. Capital loss is reported in the tax year in which it is
Whether the C Corporation is filing an Initial Return (first incurred. Gains and Losses must be adjusted to indicate
time filing), an Amended Return (making changes to an any difference in Arkansas and federal basis. ACA 26-51-
original return), a Final Return (going out of business), 460 adopts Internal Revenue Code Section 1400Z-2 as
or filing as a Cooperative Association, clearly mark the in effect on January 1, 2018 for tax years beginning on
AR1100CT by checking the applicable box at the top of or after January 1, 2018 regarding opportunity zones. To
the form. claim an exemption for capital gains as a result of the sale
of property located in an opportunity zone for Arkansas
Income income tax purposes, the property must be located in an
opportunity zone located in Arkansas. Opportunity zone
Line 7-Gross Sales: Enter the gross sales, less goods gains for property located in other states are taxable in
returned, and any allowances or discounts from the sale Arkansas.
price.
Line 14-Other Income: Enter all other taxable income
Line 8-Less Cost of Goods Sold: Enter the cost of for which no place is provided on the return. The holder of
goods sold. If the production, purchase, or sale of the ownership interest in a Financial Asset Securitization
merchandise is an income producing factor in the trade or Investment Trust (FASIT) must list the net income from
business, inventories of merchandise on hand should be prohibited transactions on this line. Attach schedule
taken at the beginning and end of the taxable year, which explaining all items included.
may be valued at cost or market, whichever is lower.
Fully explain the method used. In case the inventories Line 15-Total Income: Enter the net amount of Lines 9
reported on the return do not agree with those shown on through 14 inclusive.
the balance sheet, attach a statement explaining how the
difference occurred. Deductions

Line 9-Gross Profit: Enter the gross profit which is Line 16-Compensation of Officers/Other Salaries
obtained by deducting Line 8 from Line 7. and Wages: Enter the compensation of all officers and
employees, in whatever form paid. Attach a schedule
Line 10-Dividends: Enter taxable dividends only. showing amounts paid to officers and employees
Dividends from 80% or greater directly owned subsidiaries separately, if not shown separately on the federal return.
are exempt. The schedule should reconcile Arkansas and Federal
compensation of officers and employees.
Line 11-Taxable Interest: Enter interest income taxable
in Arkansas. Enter amounts received or credited as Line 17-Repairs: Enter the amount of repair costs for
interest to the corporation during the tax year on bank business property.
deposits, C.D.’s, notes, mortgages, corporation bonds,
taxable U.S. interest, and all other interest including Line 18-Bad Debts: Enter debts which have been
interest on out-of-state municipal bonds (out-of-state definitely ascertained to be worthless and have been
municipal bonds are taxable in Arkansas). Attach charged off within the year. The Reserve Method for
schedule to the Arkansas return identifying each computing and deducting bad debts on receivables
U.S. Agency or political subdivision of Arkansas may be used only by small banks and thrift institutions.
and Schedule AR1100REC to reconcile amounts A debt previously charged off as bad, if subsequently
received that are not included as taxable interest on collected, must be reported as income for the year in
the Arkansas return. which collected.

Line 12-Gross Rents/Gross Royalties: Enter all gross Line 19-Rent on Business Property: Enter rent paid
rents and royalties. Attach schedule showing amounts for business property.
received from rents and royalties separately, if not shown
separately on federal return. The schedule should Line 20-Taxes: Enter taxes paid or accrued during the
reconcile Arkansas and federal rents and royalties. taxable year. Do not include Arkansas or federal income
taxes or taxes assessed against local benefits tending
Page 14

- 15 -

to increase the value of the property assessed. Attach Note: Expenses of Earning Tax Exempt Income
Schedule AR1100REC to the AR1100CT to reconcile
federal and Arkansas taxes. ACA 26-51-431(c) provides that no deductions shall be
allowed for interest on indebtedness incurred or continued
Line 21-Interest: Enter interest paid on business to purchase or carry obligations the interest on which is
indebtedness. wholly exempt from the taxes imposed by Arkansas
law; expenses otherwise allowable as deductions which
Line 22-Contributions: Enter the Arkansas allowable are related to tax exempt income other than interest;
amount for charitable contributions. Title 26 U.S.C.170 expenses otherwise allowable as deductions which are
as in effect on January 1, 2019, regarding deductions related to non-business income.
for charitable contributions, is adopted for the purpose
of computing Arkansas income tax liability with the Example a: (interest expense):
exception of the carryforward period. A five (5) year
carryforward period is allowed and is carried over avg. non-tax assets disallowed
separately from the NOL. No carryback of contributions avg. total assets X interest expense = expense
is allowed. The Arkansas contribution deduction allowable
will be calculated using Arkansas taxable income rather Example b: (non-business income):
than Federal taxable income. The contribution limits
are calculated on a separate corporation basis for % X non-bus. inc. = disallowed expense
consolidated filers. (ACA 26-51-419)(a)(1)
Taxpayer must justify % used and submit schedule.
Line 23-Depreciation: Enter depreciation expense State may increase % if justification can be made.
claimed. ACA 26-51-428 did not adopt the bonus
depreciation provisions contained in Internal Revenue Line 28-Taxable Income Before Net Operating Losses:
Code 168(k). The following IRC Codes were adopted: Enter the amount from subtracting Line 27 from Line 15.
Sections 167,168(a)-(j) of the IRS Code of 1986 as
in effect on January 1, 2019, and Section 179 as in Line 29-Net Operating Losses: Enter on line 29, or
effect on January 1, 2009 for property purchased in tax Schedule A, Part C, Line 3, net operating losses being
years beginning or after January 1, 2014. For tax years claimed, but do not exceed net taxable income on
beginning on or after January 1, 2011, the Arkansas the return. Losses must be carried forward under the
Section 179 expense election is $25,000 with phase out following conditions:(Attach AR1100NOL form)
beginning at $200,000. Attach Arkansas Schedule
AR1100REC to the AR1100CT to reconcile Federal (A) Net operating losses must be carried over to the next
and Arkansas depreciation. succeeding taxable period and annually thereafter
for a total period of eight (8) tax periods succeeding
Line 24-Depletion: Enter depletion claimed. Arkansas the year of such net operating loss or until such net
allows Federal depletion allowances as in effect January operating loss has been exhausted or absorbed by
1, 2019. In computing the depletion allowance deduction the taxable income of any succeeding year, whichever
allowed for oil and gas wells, the depletion deduction shall is earlier if the loss occurred in a tax year beginning
be controlled by the provisions of IRC Section 613A as in 2020, NOL occurring in tax years beginning before
in effect on January 1, 2019. 2020 will carryforward 5 tax years; NOL occurring in
tax years beginning in 2021 or later will carry forward
Line 25-Advertising: Enter amount for business 10 tax years.
advertising.
(B)For computing the amount of NOL that will be allowed
Line 26-Other Deductions: Enter other deductions for carryforward purposes, there shall be added to
authorized by law. Attach schedule explaining all gross income all nontaxable income, not required to
items included. Pension Profit Sharing and Employee be reported as gross income by law, less any related
Benefits deductions remain valid deductions. Those expenses which will otherwise be nondeductible.
lines were removed from Form AR1100CT to allow other Multistate tax filers must follow above procedures
modifications. and apportion NOL by the apportionment formula for
year of loss, applying the Arkansas percentage factor
for the year of loss against total apportionable loss
Line 27-Total Deductions: Enter the total of Lines 16
for that year. Failure to provide a complete schedule
through 26 inclusive.
of net operating losses (with the return) may result in
disallowance of any NOL claimed.
Page 15

- 16 -

Carryback of NOL is not allowed. Contributions are not Line 40-Amount Applied to Check Off Contributions:
to be added to NOL and carried forward. Enter amount applied to Check Off Contributions; attach
AR1100CO.
Net operating losses of a corporation which merges
into another corporation will be allowed under the Line 41-Amount to be Refunded: Enter amount to be
following conditions: refunded (Line 38 less Lines 39 and 40).

(1) The acquiring corporation must own at least 80% of Line 42-Tax Due: Enter the tax due (Line 33 less Line
the acquired corporation’s voting stock, and 34 and 35; and Line 36 plus or minus Line 37).
(2) Assets of the merged corporation must earn sufficient
profits in the post-merger period to absorb the Line 43-Interest on Tax Due: Enter the interest on tax
carryover losses claimed by the surviving corporation. due.

Attach schedules of proof and computations to the Line 44-Penalty for Late Filing or Payment: Enter the
return on which any NOL is being carried forward. penalty for late filing or payment amount.

Line 30-Net Taxable Income: Enter the amount of Line 45-Penalty for Underpayment of Estimated Tax:
taxable income (Line 28 less Line 29 or Schedule A Enter the penalty for underpayment of Estimated tax, at-
Line C4 on page 2). (If Amended Return box tach AR2220 and enter exception checked in Part 3.
checked,enter amended net taxable income).
Line 46-Amount Due: Enter the amount due (add Lines
Line 31-Tax from Table: Enter Tax from Table (pages 42 through 45).
32-33).

Line 32-Business Incentive Credits: Enter Business
Incentive Credits. Attach AR1100BIC and original
certificates.

Line 33-Tax Liability: Enter Tax Liability. (If Amended
Return box checked, enter amended tax liability.) (Line
31 less Line 32)

Line 34-Estimated Tax Paid: Enter Estimated Tax paid,
including estimate carryforward from prior year.

Line 35-Payment with Extension Request: Enter
payment made with extension request.

Line 36-Withholding Payment: Enter amount of
withholding from a partnership, if applicable, attach Form
AR1100-WH and AR1099PT.

Line 37-Amended Return Only: Enter Net tax paid as
a positive number on previous return(s) for this tax year.
If the net tax return of the previous return(s) resulted
in a refund or increased overpayment carried forward,
enter the net amounts as a negative number in brackets
or parenthesis.

Line 38-Overpayment: Enter Overpayment amount
(Line 34 plus Line 35 plus Line 36; plus or minus Line
37, less line 33).

Line 39-Amount Applied to 2022 Estimated Tax: Enter
amount applied to 2022 estimated tax.
Page 16

- 17 -

                               General Instructions
For Taxpayers with Income from Sources Within and Without the State

Multistate corporations should complete lines 30-46 of  Financial Institutions must use the single sales factor 
page 1, and Schedule A on page 2 of Form AR1100CT.  as outlined in Arkansas Codes Annotated 26-51-
Multistate corporations should not complete lines 7-29  1403.  Construction  companies,  pipelines,  publishing 
of  Form AR1100CT. For  tax years beginning  on  or         companies, railroads, and TV and radio broadcasters 
after January 1,  2021, all  multistate corporations        must utilize the three factor double weighted sales 
should  use the single sales factor only, unless            factor apportionment method with factor modifications. 
they  are  required  to  use  a  three  factor  or  other   Requirements for apportionment formulas of the 
apportionment formula under the special industry            businesses listed in this paragraph (except for financial 
apportionment regulations.                                  institutions) are contained in the Arkansas Corporation 
                                                            Income Tax Regulations which may be obtained from 
Business Income is defined in ACA 26-51-701(a) as 
                                                            www.dfa.arkansas.gov/income-tax/corporation/.
income arising from transactions and activity in the 
regular course of the taxpayer’s trade or business and 
                                                            Change of Method
includes income from tangible and intangible property 
                                                             
if the acquisition, management, and disposition of the 
                                                            Prior approval Required Before Deviation From the 
property constitute integral parts of the taxpayer’s trade 
                                                            Allocation and Apportionment Method: If the allocation 
or business operations. In essence, all income which 
                                                            and apportionment provisions as set out above do not 
arises from the conduct of trade or business operations 
                                                            fairly represent the extent of the taxpayer’s business 
of a taxpayer is business income. Income of any type or 
                                                            activity in this State, the taxpayer may petition for, or the 
class and from any source is business income if it arises 
                                                            Commissioner of Revenue, Department of Finance and 
from transactions and activity occurring in the regular 
                                                            Administration  may require in respect to all or any part 
course of a trade or business. In general, all transactions 
                                                            of the taxpayer’s business activity, if reasonable:
and activities of the taxpayer’s economic enterprise as 
a whole constitute the taxpayer’s trade or business and     A)  Separate accounting
will be considered “Business Income”, unless otherwise       
excluded by Arkansas law. ACA 26-51-701(e) defines          B)  The inclusion of one or more additional factors which 
Nonbusiness income as all income other than business            will fairly represent the taxpayer’s business activity 
income.                                                        in this State, 
                                                            or
Unitary Determination of Intangible Income                  C)  The employment of any other method to effectuate 
                                                               an equitable allocation and apportionment of the tax-
Interest, dividends (less than 80% directly owned), rents,     payer’s income. 
royalties, gains, and losses from multistate corporations               
are  apportionable  to Arkansas  if  a  unitary  business     To “petition for” and approved by DFA shall mean  a
relationship exists between the intangible income and     formal written request submitted and approved prior  
the State of Arkansas. Generally, a unitary business     to the filing of a return. 
relationship will exist when an activity conducted in one 
state benefits and is benefited by an activity conducted    Schedule A-Apportionment of Income for Multistate 
in another state.                                           Corporation

Apportionment Formula                                       Enter the FEIN in the box provided. 

In general, taxpayers with income derived from activities   Part A - Income To Apportion
both within and without the State are required to apportion 
Business Income and allocate the Nonbusiness and            Line  1: Enter federal taxable income  before any 
Partnership income using the following factors: For  adjustments, net operating  losses, or special 
tax years beginning on or after January 1, 2021, all  deductions from Line 28 of the federal Form 1120. If 
multistate corporations should use the single sales         federal Form 1120 is not filed, use the appropriate line 
factor only unless they are required to use a three         from the federal form that is filed that reflects taxable 
factor apportionment formula under the special              income  before adjustments, net operating  loss, and 
industry apportionment regulations.                         special deductions. 

                                                                                                             Page 17

- 18 -

Line 2: Enter any Add Adjustments. Examples Include: Line b: Enter Rental Property: (8 times annual rent
Arkansas Corporation Income Taxes Deducted,Bonus Column A and B.)
Depreciation, Federal Charitable Contributions,
and Partnership Loss. (Attach detailed schedule) Line c: Enter Total Property in both Columns: (Add Lines a.4
and b).
Line 3: Enter any Deduct Adjustments. Examples
include: Arkansas Depreciation, Arkansas Charitable In Column C, calculate the Arkansas percent by dividing
Contributions, Partnership Income. (Attach detailed the amount on Line c, Column A by the amount on Line
schedule) c, Column B.

Line 4: Enter Arkansas Total Apportionable Income. Payroll Factor: The payroll factor is only to be
Line 1 + Total Amount from Line 2 - Total Amount from used if the taxpayer is subject to a special industry
Line 3 = Line 4, Total Arkansas Apportionable Income. regulation that requires a modified three factor
apportionment method. The payroll factor is a
Note: Lines 2 and 3 are for reporting any adjustments fraction, the numerator of which is the total amount paid
to taxable income that result in differences between in this State during the tax period by the taxpayer for
Federal and Arkansas tax laws. The examples listed compensation and the denominator of which is the total
above are not intended as an all-inclusive list of compensation paid everywhere during the tax period.
required adjustments. The payroll factor shall include only that compensation
which is included in the computation of the apportionable
Part B - Apportionment Factor income tax base for the taxable year. (ACA 26-51-713
and ACA 26-51- 1405)
Column A is for Amounts in Arkansas; Column B is
the Total Everywhere; Column C is the Percentage Column A is total compensation paid within Arkansas;
of Column (A)÷(B). Calculate all percentages to six Column B is total compensation paid everywhere during
(6) places beyond whole percentages. Example the tax year; Column C is the percentage of Column (A)
26.123456% ÷ (B).

Property Factor: The property factor is only to Line 2: Enter Salaries, Wages, Commissions and
be used if the taxpayer is subject to a special Other Compensation Related to the Production of
industry regulation that requires a modified three Business Income.
factor apportionment method. The property factor
is a fraction, the numerator is the average value of the Sales/Receipts Factor: The receipts factor is a fraction,
taxpayer’s real and tangible personal property owned the numerator of which is the total sales of the taxpayer
or rented and used in this State during the tax period, in this State during the tax period, and the denominator
and the denominator is the average value of all the of which is the total sales of the taxpayer everywhere
taxpayer’s real and tangible personal property owned or during the tax period. The method of calculating receipts
rented and used during the tax period. Please refer to for purposes of the denominator is the same as the
the special industry apportionment regulations for method used in determining receipts for purposes of the
any modifications required. numerator. The receipts factor shall include only those
receipts which constitute business income and are
Line 1: Enter Property Used in Business included in the computation of the apportionable income
base for the taxable year. Arkansas requires receipts to
Line a: Tangible Assets Used in Business and be gross receipts instead of net receipts.
Inventories.

(a1) Enter the amount at the beginning of the year in
Line 3: Sales/Receipt
both Column A and Column B.
(a2) Enter the amount at the end of the year in both (a) Enter Destination Shipped from Within Arkansas:
Column A and Column B. Sale of property that is delivered or shipped by a seller
(a3) Enter total amounts: (Add Lines a1 and a2) in located in Arkansas to a purchaser located in Arkansas.
both Columns.
(a4) Enter Average of Tangible Assets: (Line 3 ÷ 2) in (b) Enter Destination Shipped from Without Arkansas:
both Columns. Sale of property that is delivered or shipped to a purchaser
located in Arkansas regardless of the f.o.b. point or other
conditions of the sale.
Page 18

- 19 -

(c) Enter Origin Shipped from Within Arkansas to Part C - Arkansas Taxable Income
U.S.Govt.: Gross receipts from sales of tangible personal
property to the United States Government are in this state Line 1: Enter Income Apportioned to Arkansas. (Part
if the property is shipped from an office, store, warehouse, A, Line 4) x (Part B, Line 5, Column C).
factory, or other place of storage in this state and the
purchaser is the U.S. Government. Line 2: Enter Direct Income Allocated to Arkansas:
Include non-business income and partnership income/
(d) Enter Origin Shipped from Within Arkansas to loss that are sourced to Arkansas. Arkansas Regulation
Other Non-Taxable Jurisdictions: Sales of property that 1.26-51-802(b) requires corporations to directly allocate
is shipped from an office, store, warehouse, factory or partnership Arkansas income or loss to Arkansas rather
other place of storage in Arkansas to a taxpayer that is than including partnership income and apportionment
not taxable in the state of the purchaser. factors in the corporation’s apportionment formula.
Multistate corporations with partnership income should
(e) Enter Other Gross Receipts: Includes items such deduct all partnership income on Part A, Line 3 (Deduct
as interest income, other income, proceeds from sales of Adjustments). Partnership losses should be added on
assets, rental income. (Attach schedule) Part A, Line 2 (Add Adjustments). The corporation’s
Arkansas partnership income or loss should then be
Gross receipts from transactions other than sales of entered on Part C, Line 2 Add: Direct Income Allocated
tangible personal property are attributed to Arkansas if: to Arkansas line. Attach Forms AR K-1 and if claiming
1) The income producing activity is performed entirely withholding, attach Forms AR1099PT.
within Arkansas or, 2) If the income producing activity
is performed both inside and outside of Arkansas, Line 3: Enter only the amount of Apportioned NOL
the income reportable to Arkansas is determined available or the amount needed to absorb the total of
by calculating the property, payroll, and sales factor Lines 1 and 2 on Part C. (Attach Form AR1100NOL).
excluding sales from transactions other than the sale
of tangible personal property and applying the resulting Example: Line C1=$1000 + Line C2=$500
percentage to the Arkansas sales factor numerator for NOL available is $5000; Line C3 will only show $1500
gross receipts from transactions other than sales of
tangible personal property. Line 4: Enter Total Income Taxable to Arkansas:
Total of Lines C1 and C2, and subtract C3. (Enter here
(f) Enter Total Sales/Receipts: (Add Lines 3a through and on Line 30, page 1)
3e). Divide Line 3f in Column A by Line 3f in Column B
to arrive at the percentage for Line 3f in Column C. Special Industry Apportionment Rules

(g) Enter Double Weighted: Applies only to Arkansas Regulations require taxpayers primarily engaged in
corporations reporting under the three factor certain industries to apportion income using a special industry
special industry regulations. Corporations using a apportionment method. See below for a brief description of
single sales factor apportionment or a single factor each special industry apportionment method. For a complete
apportionment method for special industries do not description of industries that are required to modify their
double weight sales. apportionment factors, see the Corporation Income Tax
Regulations at www.dfa.arkansas.gov.
Line 4: Enter Sum of Percentages: Add Column C,
Lines 1c, 2a and 3g. Construction Contractors

Line 5: Enter Percentage Attributable to Arkansas: Arkansas Regulation 1.26-51-718(d) modifies the
Line 4 divided by the Double Weighted Factor. For Part property factor to include the average value of construction
B, Line 5, divide Line 4 by number of entries other than in progress. It also modifies the payroll factor to include
zero which you make on Part B, Column B, Lines (1c), compensation paid for particular construction projects
(2a), and (3f). In Part B, Column C, Line (3f), counts as and compensation “thrown back” to Arkansas if not
two (2) entries, only if using double weighted factor. For reported to another state. The sales factor is modified
corporations using the sales factor only or a single for the percentage of completion method.
factor apportionment method under the special
industry regulations, enter the percentage on Line
3 F, Column C.

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Television and Radio Broadcasting                             services performed both in and outside the State based 
                                                              on the total number of barrel or unit miles in Arkansas 
Arkansas  Regulation  2.26-51-718(d) modifies the             divided by the total barrel or unit miles system-wide. The 
property factor to exclude outer-jurisdictional, film and     sales factor includes any gas sales and storage sales 
radio transmission property from the numerator and            within Arkansas plus a proportionate part of system 
denominator of the property factor. The numerator of the      revenue earned in Arkansas determined on the basis of 
sales factor shall include all gross receipts of the taxpayer total barrel or unit miles within Arkansas to the total barrel 
from sources within Arkansas plus a ratable part of film      or unit miles in the system.
or radio programming revenue including advertising 
revenue determined by an audience factor. The audience        Railroads
factor is determined based on the ratio that the taxpayer’s 
Arkansas viewing or listening audience bears to its total     Arkansas Regulation 1.26-51-204 modifies the property, 
viewing or listening audience.                                payroll, and sales factor to include a mobile component 
                                                              that is calculated based on miles operated in Arkansas 
Publishing                                                    divided by total system miles.

Arkansas  Regulation  3.26-51-718(d)   modifies  the          Private Railcar Operators
apportionment factors for taxpayers in the business of 
publishing, selling, licensing or distribution of books,      Arkansas Regulation 2.26-51-204 requires taxpayers, 
newspapers, magazines, periodicals, trade journals, or        other than a railroad, engaged in the business of operating 
other printed materials that have income from sources         railcars or in the business of furnishing or leasing railcars 
both inside and outside of Arkansas. Outer-jurisdictional     for the transportation of freight or property whether or not 
property shall not be included in the property factor’s       owned by such taxpayer, over any railway lines partly 
denominator. The sales factor is modified to include a        within and partly without the State to determine Arkansas 
“circulation factor”.                                         net taxable income by taking that portion of total net 
                                                              operating income that the total miles operating in the State 
Airlines                                                      bears to total system miles operated.

Arkansas Regulation 4.26-51-718(d) requires airlines          Public Utilities
to determine Arkansas net taxable income by taking that 
portion of total operating revenue that the total passenger   Arkansas Regulation 3.26-51-204  requires telephone, 
and freight receipts in Arkansas bears to total receipts      electric power, and gas distribution companies operating 
from both inside and outside of Arkansas. The Arkansas        both inside and outside of Arkansas shall allocate and 
and Total Passenger & Freight Receipts should be              apportion their net income provided under ACA 26-51-701. 
included on line 3.f. of Schedule A of Form AR1100CT 
with a notation that this represents Passenger & Freight 
Receipts.
                                                              Allocated Income
Bus Lines and Trucking Companies
                                                              Partnership Income
Arkansas Regulation 5.26-51-718(d) requires a company 
whose primary business is bus lines or trucking to            Act 482 of 2017 amends ACA 26-51-802(c) to require 
determine its net income subject to Arkansas income tax       partnership income from activites within and without this 
by an apportionment formula which is the number of miles      State that is reflected on a partnership return shall be 
operated within Arkansas divided by the total system miles.   apportioned to Arkansas under the uniform Division of 
The Arkansas and Total miles operated should be included      Income for Tax Purposes Act   (ACA 26-51-701 et seq). 
on Line 3.f of Schedule A of Form AR1100CT with a notation    Corporations that are partners in a partnership must 
that this represents mileage.                                 allocate their share of partnership income as shown on 
                                                              form AR K-1 from the partnership.
Pipelines
                                                              Non-Business Income
Arkansas  Regulation  6.26-51-718(d)   establishes 
special rules for taxpayers operating a pipeline for the      The following items of income to the extent that they 
transportation of oil or gas both inside and outside of       do not constitute business income are to be allocated 
Arkansas. The payroll factor includes compensation paid       to this State.
both inside and outside of Arkansas plus a ratable part for 
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1. Rents & Royalties:                                         4. Patent and Copyright Royalties:

  A) Net rents and royalties from real property located in     A) If and to the extent that the patent or copyright is 
       this State.                                                  utilized by the taxpayer in this State, 
                                                                    or
   B)  Net  rents  and  royalties  from  tangible  personal    B) If and to the extent that the patent or copyright 
       property                                                     is utilized by the taxpayer in a state in which 
    1) If and to the extent that the property is used in            the taxpayer is not taxable and the taxpayer’s 
        this State,                                                 commercial domicile is in this State.
        or
    2) In their entirety, if the commercial domicile is in    A copyright is utilized in a state to the extent that printing 
         this State and the taxpayer is not organized under   or other publications originate in the state. If the basis of 
       the laws of or taxable in the state in which the       receipts from copyright royalties does not permit allocation 
       property is utilized.                                  to states or if the accounting procedures do not reflect 
                                                              states of utilization, the copyright is utilized in the state in 
The extent of utilization of tangible personal property in a  which the taxpayer’s commercial domicile is located. 
state is determined by multiplying the rents and royalties 
by a fraction, the numerator of which is the number of        Apportionment of Intragroup Intangible Licensing 
days of physical location of the property in the State during Transactions:
the rental or royalty period in the taxable year; and the 
denominator of which is the number of days of physical        Regulation 1996-3 clarifies the calculation method for 
location of the property everywhere during all rental or  determining the sales factor in apportioning business 
royalty periods in the taxable year.                          income  received  from  intragroup  intangible  licensing 
                                                              transactions. This regulation applies to a corporation that 
If the physical location of the property during the rental  is a passive intangible holding company and receives 
or royalty period is unknown or unascertainable by the  business income from intragroup intangible licensing 
taxpayer, tangible personal property is utilized in the state  transactions with one or more members of the same 
in which the property is located at the time the rental or  group. Also, at least one of the other members of the 
royalty payer obtained possession.                            same group from which the business income is received 
                                                              by the taxpayer must be subject to the Arkansas Income 
2.  Gain and Losses:                                          Tax Act.

Gains and losses from sales of assets:                        The sales factor for intragroup intangible transactions is
                                                              modified as follows:
 A) Sales of real property located in this State.
                                                              1.  If the licensing agreement states a method of 
 B) Sales of tangible personal property.                      measuring the activity between the licensor and licensee, 
    1) The property had a situs in this State at the time     the numerator of the sales factor is the amount of the 
              of sale,                                        sales or receipts received as provided in the licensing 
        or                                                    agreement.
    2) The taxpayer’s commercial domicile is in this  
        State,                                                2.  If the licensing agreement does not state a method 
        or                                                    of  measuring  the  activity  between  the  licensor  and 
    3) The property has been included in depreciation   licensee, the measuring activity will be based on one of 
         which has been allocated to this State; in which   the following:
       event gains or losses on such sales shall be  
        allocated on the percentage that is used in the        a.  If the licensee’s activity generates sales or receipts, 
        formula for allocating income to this State.            the numerator of the sales factor will be the per-  
                                                                centage of sales in Arkansas compared to the lic- 
3.  Interest and Dividends:                                           ensee’s total sales,or

Interest and dividends if the taxpayer’s commercial            b.  If  the  licensee’s activity does not generate sales  
domicile is in this State.                                      or  receipts, the numerator of the sales factor will  
                                                                be the percentage of units produced or cost of un-
                                                                its produced in Arkansas  compared  to  the lice- 
                                                                                                            Page 21

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   nsee’s  total units  produced or total cost of units  
   produced, or

   c.  If neither of the above methods accurately  rep-  
       resent the licensor’s business activity in Arkansas, 
       the licensor may petition for, or the Director may 
       require, another method.

3.  If the licensing agreement states a method of 
measuring the activity between the licensor and licensee 
in addition to a specifically stated dollar amount, the 
numerator of the sales factor will be the stated measuring 
activity plus the stated dollar amount attributable to 
Arkansas.

This Regulation modifies the sales factor for intragroup 
intangible licensing transactions only. Business income 
from any other source should be apportioned in 
accordance with ACA 26-51-709.

If a passive intangible holding company meets the above 
characteristics and the licensee elects to forego the 
intragoup intangible licensing transactions deduction, the 
passive intangible holding company will not be required 
to report the business income received from intragroup 
intangible licensing transactions for Arkansas income 
tax purposes.

The licensee’s election to forego the deduction will be 
binding unless the licensee and the passive intangible 
holding company submit a written petition to change the   
election to the Director, and the Director approves the 
change.

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                                    Financial Institutions

In general, all state and national banks, savings and          Receipts Factor
loan, building and loan associations, or any other entity 
operating as financial institutions are to be taxed under      Generally, the receipts factor is a fraction; the numerator is 
existing law. For a complete definition of “financial          the financial institution’s gross receipts in Arkansas during 
institution”, refer to ACA 26-51-1402.                         the taxable year, and the denominator is all gross receipts 
                                                               that the financial institution derives from transactions and 
Who Must File                                                  activities in the regular course of its trade or business. 
                                                               Interest from loans secured by real property is attributed 
 1)  A financial institution having its principal office in    to Arkansas if the property is located in Arkansas. Interest 
 this State shall be taxed as a business corporation  from loans not secured by real property is attributed to 
 organized and existing under the laws of this State,  Arkansas if the borrower is located in Arkansas. Interest 
 or                                                            from credit cards receivables and fees charged to card 
 2) A  financial  institution  having  its  principal  office  holders are attributable to Arkansas if the billing address 
 outside this State, but doing business in this State,  of the card holder is in Arkansas. Net gains from the 
 shall be taxed as a foreign business corporation  sale of loans and loan servicing fees are sourced in 
 doing business in this State.                                 the same manner as the loan interest. Net gains from 
                                                               the sale of credit card receivables are sourced in the 
This is not intended to recognize the right of a foreign  same manner as the interest on credit card receivables. 
financial institution to conduct any business in this State    Interest, dividends, and net gains from investment and 
except to the extent and under the conditions permitted  trading assets and activities are attributed to Arkansas 
by any acts or any other now existing applicable laws of  if such receipts are properly assigned to a regular place 
this State.                                                    of business of the taxpayer within Arkansas.

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.

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.

Act 822 of 2019 amends ACA 26-5-101, Article IV, 
26-51-709 through 26-51-718, and ACA 26-51-1401 to 
ACA 26-51-1405 to provide for a single sales factor to 
apportion income from within and without Arkansas for 
tax years beginning on or after 01/01/2021.

ACA  26-51-1401  requires  that  a  financial  institution 
whose business activity is taxable both within and without 
this State to allocate and apportion its net income to this 
State. All business income which is includable in the 
apportionable income tax base shall be apportioned to 
this State by multiplying such income by the taxpayer’s 
receipts factor as described in ACA 26-51-1403.

                                                                                                           Page 23

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                                                                on the county in which the business is located. Any 
        BUSINESS INCENTIVE TAX                                  unused credits may be carried forward for nine (9) tax 
                CREDITS                                         years. The ArkPlus tax credits taken during any tax year 
                                                                shall not exceed fifty percent (50%) of the business’s 
1. Purchase of Waste Reduction, Reuse, or                       income tax 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            optional income tax credit or sales tax credit to technology 
30% of the cost of approved waste reduction, reuse, or          based businesses that create a new payroll of at least 
recycling machinery and equipment including the cost of         $250,000 and pays wages at least 175% of the state or 
installation. No other credit or deductions, except normal      county average hourly wage. The credit is between 2% 
depreciation, may be claimed on that equipment. Any             and 8% of the total investment based on the total amount 
unused credit may be carried forward for the next three         invested. Depending on the average hourly wage, the 
(3) succeeding tax years or until exhausted, whichever          credits earned may be used to offset 50%, 75%, or 100% 
occurs first. Act 1476 of 2013 also extends the waste           of the tax liability. Any unused credits may be carried 
reduction, reuse or recycling equipment tax credit to           forward for nine (9) tax years. 
carry forward for a period of fourteen (14) consecutive 
tax years following the taxable year in which the credit        Act 327 of 2019 provides for projects approved after July 
originated for the Big River Steel Mill project. Income tax     24, 2019, that average hourly wages must exceed 150% 
credits that would otherwise expire during that period          of the lesser of state or county average hourly wage to 
shall be claimed first.                                         qualify for the credit.  The credit may offset 50% of the 
                                                                income tax or sales tax liability if wages exceed 150% 
2. Consolidated Incentive Act 182 of 2003                       of  the lesser of state or county average hourly wage.  
                                                                The credit may offset 75% of the income tax or sales 
Advantage Arkansas Income Tax Credit 
                                                                tax liability if wages exceed 175% of  the lesser of state 
                                                                or county average hourly wage.  The credit may offset 
ACA 15-4-2705 provides an income tax credit for creating 
                                                                100% of the income tax or sales tax liability if wages 
new jobs after the company signs a financial incentive 
                                                                exceed 200% of  the lesser of state or county average 
agreement with the Arkansas Economic Development 
                                                                hourly wage.
Commission. The annual payroll of the new employees 
must meet the payroll threshold for the county in which 
                                                                Act 911 of 2021 amends ACA 15-4-2703 and 15-4-
the business is located. The income tax credit earned is 
                                                                2706 to allow project costs to be incurred within 6 years 
a percentage of the annual payroll of the new full-time 
                                                                from the date the incentive agreement was approved 
permanent employees for a period of five (5) tax years. 
                                                                instead of the current 4 years. Credits earned because 
Unused credits may be carried forward for nine (9) tax 
                                                                of costs incurred more than 4 years after the incentive 
years. The Advantage Arkansas job creation credit cannot 
                                                                agreement is approved may not be claimed until on or 
offset more than 50% of a business’s income tax liability.
                                                                after 07/01/2023, and the maximum credits for each 
                                                                qualified applicant may not exceed $750,000 per fiscal 
Act 327 of 2019 provides that to qualify for Advantage 
                                                                year.
Arkansas credits beginning on or after July 24, 2019, the 
business must pay average hourly wages at least equal 
                                                                Research & Development with Universities Tax Credit 
to the greater of the average hourly wage of the county in 
which the facility is located, or $12.50 per hour.  A qualified 
                                                                ACA 15-4-2708(a) authorizes a business that contracts 
business may receive an additional tax credit of 1% of 
                                                                with  Arkansas colleges or universities in performing 
qualifying wages if the average hourly wage is at least 
                                                                research to qualify for an income tax credit as authorized 
equal to 125% of the lesser of the average hourly wage 
                                                                by ACA 26-51-1102(b) equal to 33% of qualified 
for the county or state in which the business locates or 
                                                                expenses. A business must submit an application to 
expands. 
                                                                AEDC and the Arkansas Science and  Technology 
                                                                Authority must also approve the plan. The credit may 
ArkPlus Income Tax Credit 
                                                                offset 100% of the tax liability and unused credits may 
                                                                carry forward nine (9) tax years. 
ACA 15-4-2706(b) allows the AEDC to provide a 10% 
income tax credit to eligible businesses based on the total 
                                                                ACA  26-51-1101 (2)(C) which allows an income tax equal 
investment in a new location or expansion project after
                                                                to 33% of a cash donation that is used by a qualified 
signing a financial incentive agreement with AEDC. The 
                                                                educational institution in Arkansas that is used to purchase 
minimum investment and payroll requirements  depend 
Page 24

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new machinery and equipment in connection with a qualified Targeted Business Payroll Income Tax Credit
education or research program. Taxpayers must submit
an application to the Arkansas Economic Development ACA 15-4-2709 provides income tax credits to “targeted
Commission on forms prescribed by the Commission and if businesses” approved by AEDC. Companies must pay
approved have itemized receipts documenting the amount wages that are 150% of the state or county average wage
of the cash donation and the purchase costs of the new and meet requisite payroll and investment thresholds.
machinery and equipment. The credit may offset 100% of The credits may be sold upon approval by the AEDC.
the tax remaining after all other credits and any unused The buyer of the tax credit shall be allowed the remaining
credits 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.
In-House Research Income Tax Credit The tax credit is equal to 10% of its annual payroll, with
a cap of $100,000 per year. The incentive may be offered
ACA 15-4-2708(b) authorizes an income tax credit for a period not to exceed five (5) tax years.
to businesses that conduct “in-house” research. The
credit allowed for approved in-house research is 10% To claim the credits authorized under the Consolidated
of qualified expenditures. However, the maximum credit Incentive Act, attach a copy of the Certificate of
that can be earned by each business is $10,000 per tax Tax Credit issued by Tax Credits/Special Refunds
year and is equal to 20% of qualified expenses. The Section to the tax return. For information regarding
income tax credit may offset 100% of the income tax application to any of the incentives under this Act
liability. Unused credits may be carried forward for nine contact Arkansas Economic Development at (501)
(9) tax year. 682-1121 or their website at http:/arkansasedc.com.

In-House Research by Targeted Business Income 3. Equity Investment Incentive Credit
Tax Credit
Act 164 of 2015 amends ACA 15-4-3305 to provide tax
ACA 15-4-2708(c) provides income tax credits for credits for entities investing in eligible businesses and
businesses deemed by the AEDC to fit within the six (6) purchases the qualified business in calendar years 2007-
business sectors classified as “targeted businesses”. 2028. The credit shall not exceed 33.33% of the actual
An eligible business may be approved for an income tax purchase price paid for the equity interest, and shall not
credit each year equal to 33% of the qualified research exceed 50% of the state income or premium tax liability.
and development expenditures incurred each year The total amount of credits available to all purchasers of
for the first five (5) tax years of the financial incentive equity interest in a qualified business shall not exceed
agreement. The income tax credit for research and $6,250,000. Any unused credit may be carried forward for
development earned by targeted businesses may be a period of nine (9) tax years and in no event be carried
sold. The business must make application to AEDC within past December 31, 2037. The application must be filed
one year of issuance and the credits may only be sold with AEDC.
one time. Any unused credits may be carried forward for
nine (9) years. Act 537 of 2019 amends Arkansas Code Annotated 15-
4-3305(g) to clarify that an equity investment incentive
In-House Research in Area of Strategic Value Tax credit may be sold only 1 time at any time before the
Credit credit is exhausted or expires.

ACA 15-4-2708(d) authorizes an income tax credit 4. Child Care Facility

equal to 33% of qualified research expenditures for an
ACA 26-51-507 provides an income tax credit of 3.9%
Arkansas taxpayer that invests in: (A) In-house research
of the annual salary of employees employed exclusively
in an area of strategic value, or (B) A project under
in providing child care services if the revenue to the
the research and development programs approved by
business does not exceed the direct operating costs
the Arkansas Science and Technology Authority. The
of the facility. Certification of eligible childcare facilities
taxpayer must apply to AEDC in order to qualify for the
must be made by the Division of Childcare and Early
income tax credit. The tax credit may be earned for the
Childhood Education. ACA 26-51-508 provides that
first five (5) tax years following the signing of a financial
a business, that qualifies for the refund of the Gross
incentive agreement. The maximum tax credit that may
Receipts Tax or Compensating Use Tax under ACA 26-
be claimed by a taxpayer under this program is $50,000
51-516 or ACA 26-53-132, shall be allowed an income
per tax year. Any unused credits may be carried forward
tax credit of 3.9% of the annual salary of its employees
nine (9) tax years.
employed exclusively in providing child care service,
Page 25

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

Page 26

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poses, any unused credit may be carried forward 6. Equipment Donation, Sale Below Cost, or
for the next four (4) succeeding tax years or until Qualified Research Expenditure & Research
exhausted, whichever 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
ACA 26-51-1009 provides an income tax credit equal to equipment. The Act is effective July 24, 2019. To qualify
10% of the project cost incurred or $27,000 for agricultural for the credit for cash donations, an application must
land leveling to conserve irrigation water. The credit shall not be filed with and approved by the Arkansas Economic
exceed the lesser of the amount of individual or corporate Development Commission. The taxpayer must obtain
income tax otherwise due or $9,000 per project. Any unused documentation from the qualified educational institution
credit may be carried forward for the next two (2) succeeding showing the amount of the donation and document the
tax years or until exhausted, whichever occurs first. amounts spent purchasing machinery and equipment.

Act 875 of 2021 amends ACA 26-51-1009 for tax years ACA 14-144-311 authorizes the creation and operation
beginning on or after 01/01/2021 to provide that the tax of research park authorities for the purpose of economic
credit shall not exceed the lesser of 25% of the project development, exempting the property of each research
cost incurred or $35,000. The amount of tax credit shall park authority from all state, county and municipal taxes
not exceed the lesser of the amount of individual or including income tax, inheritance tax and estate tax. The
corporate income tax otherwise due or $18,000. Any act allows contributions to research park authorities to
unused credits may be carried over for a maximum of qualify for the credit provided by ACA 26-51-1102.
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,
ACA 26-51-1505 allows the Wetland and Riparian the credit allowed is the lesser of one-half (1/2) of the
Zone Creation and Restoration Tax Credit amount amount paid by the company or the hourly training
not to exceed $50,000 and shall equal 50% of the fair cost up to $80 per instructional hour for tax years prior
market value of the qualified property interest donation, to 2014 to increase to $100 per hour for tax years
calculated to exclude any short term capital gain under beginning on or after January 1, 2014. If training is by
26 U.S.C. 170(e)(1)(A) as in effect on January 1, 2009. company employees or company paid consultants, the
The amount of credit shall be equal to the project costs tax credit cannot be more than $25 per hour. There is no
not to exceed the lesser of income tax due or $5,000. An carryforward period for this credit. Applications for this
eligible donor may earn only one Wetland and Riparian credit are available from the AEDC at (501) 682-7675.
Zone Conservation Tax Credit per income tax year. The
availability of the tax credits shall expire on December 8. Tourism Development Credit
st
31 of the calendar year following the calendar year
the tax credits used exceed $500,000. Any unused ACA 15-11-509 provides an income tax credit equal
credit may be carried forward for a maximum of nine (9) to 4% of the payroll of the new full-time permanent
consecutive taxable years. employees working at a tourism attraction project. To
be counted as a new full-time permanent employee, for
the purpose of qualifying for the tax credit, the employee
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in the position must have been an Arkansas taxpayer succeeding tax years or until the credit is exhausted,
during the year in which the credit was earned. For whichever occurs first. This program is administered by
projects receiving approval after March 1,1999, the the AEDC.
credit may be applied against the approved company’s
income tax liability for the succeeding nine (9) tax years Act 628 of 2021 amends ACA 15-4-2306(b) to allow the
or until exhausted, whichever occurs first. credit to offset 100% of the tax liability, and to allow an
unused credit maximum carry forward of ten (10) years,
9. Apprenticeship Program for tax years beginning on or after 01/01/2020.

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

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
tax liability in any one tax year and has no carryforward equity interest in a Capital Development Company in
provision. The employee must attend a qualified calendar years 2003-2015 to be entitled to an income or
Arkansas institution. Form AR1036 must be attached to annual premium tax credit equal to 33.33% of the actual
the Arkansas return in addition to Form AR1100BIC to purchase price, limited to 50% of the net Arkansas income
claim this credit. or premium tax liability in any one tax year. No capital
development company shall enter into an agreement or
11. Family Savings Initiative Credit commitment for the purchase by any person of equity
interests in the capital development company on or after
ACA 20-86-109 creates the Family Savings Initiative July 1, 2007. Any unused credit may be carried forward
Act, which provides a tax credit to those taxpayers who for the next succeeding tax year and annually thereafter
make contributions to a designated fiduciary organization for a total of eight (8) years succeeding the year in which
created pursuant to this act. The fiduciary will notify the the equity interest was purchased or until exhausted,
Department of Human Services of the deposits which whichever occurs first. In no event may the credit be
will issue a certificate to be attached to the tax return for allowed for any tax year ending after December 31, 2021.
the first year the credit is taken. The credit allowed is the
lesser of the income tax due or $25,000 per taxpayer. The 15. Affordable Neighborhood Housing Tax
total tax credit allowed for all taxpayers is $100,000 per Credit
year. Any unused credit may be carried forward for the
next three (3) succeeding tax years or until exhausted, ACA 15-5-1301 et seq. provides an income or annual
whichever occurs first. premium tax credit for any business firm engaged in
providing affordable housing which is approved through
12. Public Road Improvement the Arkansas Development Finance Authority. The tax
credit is limited to 30% of the total amount invested in
ACA 15-4-2306 provides a tax credit for those taxpayers affordable housing assistance activities. The credit may
who contribute to the “Public Roads Incentive Fund” for not exceed $750,000 or the income or premium tax
the improvement of public roads. The credit is limited otherwise due in any taxable year. Any unused credit
to 33% of the total contributions made to the fund, and may be carried forward for the next five (5) succeeding
in any tax year, is limited to 50% of the net Arkansas tax years or until exhausted, whichever occurs first.
tax liability after all other credits have been taken. Any
unused credit can be carried forward for the next three
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16. Coal Mining Tax Credit whichever occurs first. The credit expires and no credit
may be established for a tax year ending after December
ACA 26-51-511 provides an income or annual premium 31, 2021. The amount of credit that may be used by a
tax credit of $2.00 per ton of coal mined, produced, or taxpayer for any taxable year shall not exceed twenty-
extracted on each ton of coal mined in Arkansas in a tax five thousand dollars ($25,000).
year. An additional credit of $3.00 per ton will be allowed
for each ton of coal mined in Arkansas in excess of 20. Arkansas Historic Rehabilitation Income
50,000 tons in a tax year. The credit can only be earned Tax Credit
if the coal is sold to an electric generation plant for less
than $40.00 per ton excluding freight charges. The credit ACA 26-51-2201 creates a credit for income taxes
expires five (5) tax years following the tax year in which or premium taxes for qualified historic rehabilitation
the credit was earned. expenses in an amount equal to 25% of the total cost
incurred by a person, firm or corporation subject to
17. Venture Capital Investment Credit state income tax or an insurance company paying
annual premium tax to complete a certified rehabilitation
ACA 15-5-1401 et seq. provides an income tax credit project up to the first $500,000 of expenses on income
up to $10 million per fiscal year as recommended by the producing property or $100,000 on nonincome producing
Arkansas Development Finance Authority and approved property. The minimum investment to obtain the credit is
by the State Board of Finance. The credit may not exceed $25,000. Historic rehabilitation credits are approved by
the income tax otherwise due and is non-refundable. the Department of Arkansas Heritage. The maximum tax
Any unused credit may be carried forward for five (5) credits that may be approved in one year is $4,000,000.
succeeding tax years after the tax year in which the credit The credit may offset 100% of income or annual premium
was first earned. tax due. Any unused credit may be carried forward for
five (5) tax years or until exhausted.
18. Rice Straw Tax Credit
The Arkansas Historic Rehabilitation tax credits program
ACA 26-51-512 allows an income tax credit in the amount
is effective for tax years on or after January 1, 2009, and
of $15.00 for each ton of rice straw over 500 tons that
ending on or before December 31, 2037. The holder of
is purchased by an Arkansas taxpayer who is the end
rehabilitation tax credits may sell or assign all or a portion
user of the straw (person processing, manufacturing,
of unused credits by notifying the Department of Arkansas
generating energy, or producing ethanol). The amount of
Heritage and the Department of Finance & Administration
the credit is limited to 50% of the income tax due for the
if the credit is an income tax credit.
tax year. Any unused credit may be carried forward for
ten (10) consecutive tax years following the tax year the
Act 393 of 2017 increases the maximum costs eligible
credit was earned and is effective for tax years beginning
for the historic rehabilitation credit to $1,600,000 for
on or after January 1, 2006.
projects starting on or after July 1, 2017. Act 470 of
2019 reduces the minimum investment necessary for
19. Delta Geotourism Incentive Act
non-income producing properties to $5,000 for tax years
The Delta Geotourism Incentive Act of 2007 as amended beginning on or after January 1, 2019.
allows an income tax credit equal to 25% of an investment
of up to $250,000 in a geotourism-supporting business, Act 855 of 2019 provides for a Major Historic Rehabilitation
a tourism attraction, or tourism-supporting business Credit equal to 25% of qualified rehabilitation incurred by
project that attracts out of state visitors in an economically the owner to complete a certified rehabilitation approved
distressed area of the Lower Mississippi River Delta in by the Department of Arkansas Heritage. The minimum
Arkansas. Application must be made to the Tax Credits investment for the credit is $1,500,000. The Department
Section of the Department of Finance and Administration of Arkansas Heritage may charge an application fee of
and must also be approved by the Arkansas Department up to 1% of the amount of the credit and may charge
of Parks and Tourism. The credit may be transferred a fee of 0.75% of the amount of any credit transferred.
to another tourism related business in Arkansas upon Applications for the credit must be made between July
approval by DFA and Parks and Tourism. The minimum 1, 2020 and June 30, 2025.
investment to qualify for the credit is $25,000 and a
transferee of a credit must invest a minimum of $100,000 Act 840 of 2021 amends ACA 26-51-2204 to increase
in a tourism related business project in Arkansas. Unused the maximum tax credits that may be approved in one
tax credits may be carried forward five (5) taxable years year from $4 million to $8 million per fiscal year beginning
after the year the credit is earned or until exhausted, with fiscal year 2022.

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21. Arkansas Central Business Improvement 24. Motion Picture Credit
District Rehabilitation and Development
Investment Tax Credit Act 797 of 2021 provides for a rebate or tax credit for
approved film projects. The income tax credit or rebate
ACA 26-51-2407 amends Arkansas Code 26, Chapter is equal to 20% of all qualified production and post-
51 to add Subchapter 24 to establish an investment production costs for an approved project that spends
tax credit equal to 25% for a qualified rehabilitation or at least $200,000 in a six-month period. An additional
development expenditure incurred for a qualified project 10% of payroll costs for full-time Arkansas residents, or
up to the first $500,000 on income-producing property veterans, or veteran owned small businesses is allowed.
or $200,000 on non-income-producing property with a The credit is limited to the first $500,000 of a highly
minimum investment of $30,000. The total credit will be compensated individual’s salary. The Arkansas Economic
issued for up to $1,000,000 in any one fiscal year on a Development Commission shall not approve more than
first come, first serve basis. The credit may be transferred, $4 million in motion picture tax credits in any fiscal year.
sold or assigned only one (1) time and will offset up to Unused credits may be carried forward for 5 tax years,
100% of the state income tax due. Any unused tax credit and unused credits may be transferred.
may carryforward for five (5) consecutive taxable years
or until exhausted whichever occurs first. This act will 25. Steel Specialty Products Manufacturing
take effect only if the Chief Fiscal Officer of the State Credit
certifies that sufficient funds are available. The credit will
not be funded for tax year 2018. If it is determined that Act 895 of 2021 amends ACA 26-51-506 to provide a tax
funding is available the act will be effective for tax years credit equal to 30% of the cost of equipment including
beginning on or after January 1 of the year following the installation costs for an approved project that invests in
certification and continue for a period of two (2) years. excess of at least $200 million and employs at least 150
net new employee positions with an average salary of
22. Delta Music Trail Credit at least $75,000 per year. The maximum credit that may
be claimed is $4 million if the total investment is $200
Act 1066 of 2019 provides for an income tax credit million to $275 million, $5 million if the total investment
equal to the lesser of 100% of the cost or $25,000 for is $275 million to $350 million, and $6.5 million if the
an art project that promotes awareness and encourages investment exceeds $350 million. The State of Arkansas
enjoyment of the stories, biographies, and points of has the option to purchase the credits for 80% of face
interest in blues, rock and roll, country and country music value. If the State fails to purchase credits the taxpayer
throughout the Arkansas Delta. Taxpayers must apply for or a transferee may carry forward unused credits for 3
the credit with the Arkansas Delta Music Commission and tax years. The act is effective for tax years beginning on
the commission may not approve more than $250,000 or after 01/01/2021.
of expenses in any one calendar year. The credit may
offset 100% of the tax due and unused credits may be 26. Philanthropic Investment in Arkansas Kids
carried forward up to five tax years. Scholarship Program Credit

23. Arkansas Wood Energy Products and Act 904 of 2021 provides for a tax credit equal to 100%
Forest Maintenance Credit of the eligible contributions to a scholarship granting
organization. Total tax credits awarded shall not exceed
Act 594 of 2021 provides for an income tax credit $2 million per calendar year, and unused credits may be
equal to 30% of the cost of qualifying equipment with a carried forward for 3 tax years. Tax credit applications
minimum investment greater than $50 million required must be submitted to and approved by the Tax Credits
in a project approved by the Arkansas Economic and Special Refunds Section of the Department of
Development Commission with a signed economic Finance & Administration. The act is effective for tax
incentive agreement. Each project must create at least years beginning on or after 01/01/2022.
100 new full-time jobs with an average salary of $60,000
per year. Up to $5 million of the credit may be claimed 27. Railroad Modernization Tax Credit
each year, and the State of Arkansas may purchase the
tax credits at 80% of face value. Unused credits may be Act 967 of 2021 provides a tax credit for Class II and
carried forward in perpetuity until fully claimed. Act 594 is Class III railroad track maintenance. The credit is equal
effective for tax years beginning on or after 01/01/2021. 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
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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 owner of the 
credit must contact the issuing agency and request 
a Transfer Document. The issuing agency will send a 
copy of the approved transfer documents to the Tax 
Credit Section upon completion of the sale/transfer. 
For verification purposes, the taxpayer claiming the 
credit should attach a copy of the approved transfer 
document to the return claiming credit.

                                                            Page 31

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dures, please refer to the website at www.dfa.arkansas.
Exempt Organizations
gov, or phone (501) 682-1895.
ACA 26-51-303 provides exemption from income tax-
ation for certain types of organizations.
Small Business (S) Corporations
The Non-Profit Corporation Act of 1993 sets out fil-
For tax years beginning on or after January 1, 2018. ACA
ing requirements of the Secretary of State as well as
26-51-409(b)(2) requires corporations that have elected
action to be taken for receiving recognition of income
Subchapter S treatment for federal tax purposes must file
tax exempt status by the Arkansas Revenue Division.
Subchapter S returns for Arkansas income tax purposes
Guidelines for filing with the Secretary of State may be
for the same tax year.
obtained by contacting that office at:
1) It is treated as a Small Business Corporation with the
Telephone numbers: (501) 682-3409
Internal Revenue Service (IRS).
(888) 233-0325
2) It has no more than 100 shareholders. Members of a
Website: www.sos.arkansas.gov family (and their estates) are treated as one sharehold-
er for this requirement. All other persons are treated as
Non-Profit corporations, unincorporated groups or as- separate shareholders.
sociations shall be eligible to receive Arkansas income 3) It must be a corporation organized or created under
tax exempt status upon submitting proper documenta- the laws of the United States or a state or territory or it
tion and application to: is a similar association taxed as a corporation.
4) Its shareholders are individuals, estates and certain
Arkansas Department of
trusts described in IRC 1361.
Finance and Administration
Corporation Income Tax Section 5) It has no nonresident alien shareholders.
P. O. Box 919 6) It has only one class of stock.
Little Rock, AR 72203-0919 7) It is not an ineligible corporation as defined in IRC
Telephone number (501) 682-4775 1361.
8) Banks may elect S Corporation status even though
The following information must be submitted for
the bank stock is owned by an individual’s IRA
review in determining income tax exempt status:
rather than the individual.
A) Organizations with an IRS Ruling letter:
1) Copy of IRS Ruling letter. A corporation that is treated as Qualified Subchapter
S Subsidiary (QSSS) for federal purposes is not al-
2) Copy of pages 1 and 2 of IRS lowed to file a separate Arkansas corporation return.
Form 1023 or 1024. Instead, the federal parent of any QSSS doing busi-
3) Statement declaring Arkansas ness in Arkansas must file an Arkansas return and
Code exemption. report the Arkansas activity of the QSSS.
B) Organizations without an IRS
Ruling letter: All shareholders are required to file Arkansas Individual
1) Arkansas Form AR1023CT. income tax returns or be included in a composite return.
Please refer to the 2021 Subchapter S tax instructions
2) Copy of Articles of Incorporaton,
for details on filing as an S corporation. Act 434 of 2017
Article of Association,copy of
repeals ACA 26-51-413(b).
Trust Indenture or Agreement.
3) Copy of Bylaws. For tax years beginning after December 31, 2017, it will
no longer be necessary to file a separate Subchapter S
Income derived from investments made by nonprofit election for Arkansas. Taxpayers will file a federal S re-
organizations which is not for the sole purpose of pr- turn and an S state return. Federal Subchapter S filers
viding pension and annuity benefits to members should will no longer be able to file an Arkansas C corpora-
be reported on Form AR1100CT. Attach a copy of the tion return.
applicable federal form.
Act 362 of 2021 creates a new Chapter 65 to Arkansas
Exemption from income taxation does not apply to Code Title 26 and creates the Elective Pass-Through
Sales Tax exemption. For Sales Tax forms or proce- Entity Tax for tax years beginning on or after January 1,
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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 in-
come 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 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. Form AR362 and 
vouchers for estimated payments for the Pass-through 
Entity Tax should be available in January, 2022. The 
election to be taxed at the entity level and the exemp-
tion from income tax of income subject to similar taxes 
in other states is not available for 2021.

The annual income tax  return of  a small business 
corporation  is to be submitted on  Arkansas    Form  
AR1100S and should be submitted to:

 Department of Finance and 
 Administration Corporation 
 Income Tax Manager
 P. O. Box 919
 Little Rock, AR 72203-0919

 Physical address:
 1816 West 7th Street Room 2250 
 Little Rock, AR 72201

 Telephone number... (501) 682-4775 
 Website. ........ www.dfa.arkansas.gov

                                                          Page 33

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                   Corporation Income Tax Table

1. Find your income from Line 30; Enter tax on Line 31.

 IF YOUR INCOME IS      IF YOUR INCOME IS                   IF YOUR INCOME IS
 AS      BUT       YOUR AS    BUT                      YOUR AS     BUT       YOUR
 MUCH    LESS      TAX  MUCH  LESS                     TAX  MUCH   LESS      TAX
 AS      THAN      IS   AS    THAN                     IS   AS     THAN      IS

       0 100       0    5,000 5,100                    71   10,000 10,100    212
 100     200       1    5,100 5,200                    73   10,100 10,200    215
 200     300       3    5,200 5,300                    75   10,200 10,300    218
 300     400       4    5,300 5,400                    77   10,300 10,400    221
 400     500       5    5,400 5,500                    79   10,400 10,500    224
 500     600       6    5,500 5,600                    81   10,500 10,600    227
 600     700       7    5,600 5,700                    83   10,600 10,700    230
 700     800       8    5,700 5,800                    85   10,700 10,800    233
 800     900       9    5,800 5,900                    87   10,800 10,900    236
 900     1,000     10   5,900 6,000                    89   10,900 11,000    239
 1,000   1,100     11   6,000 6,100                    92   11,000 11,100    243
 1,100   1,200     12   6,100 6,200                    95   11,100 11,200    248
 1,200   1,300     13   6,200 6,300                    98   11,200 11,300    253
 1,300   1,400     14   6,300 6,400                    101  11,300 11,400    258
 1,400   1,500     15   6,400 6,500                    104  11,400 11,500    263
 1,500   1,600     16   6,500 6,600                    107  11,500 11,600    268
 1,600   1,700     17   6,600 6,700                    110  11,600 11,700    273
 1,700   1,800     18   6,700 6,800                    113  11,700 11,800    278
 1,800   1,900     19   6,800 6,900                    116  11,800 11,900    283
 1,900   2,000     20   6,900 7,000                    119  11,900 12,000    288
 2,000   2,100     21   7,000 7,100                    122  12,000 12,100    293
 2,100   2,200     22   7,100 7,200                    125  12,100 12,200    298
 2,200   2,300     23   7,200 7,300                    128  12,200 12,300    303
 2,300   2,400     24   7,300 7,400                    131  12,300 12,400    308
 2,400   2,500     25   7,400 7,500                    134  12,400 12,500    313
 2,500   2,600     26   7,500 7,600                    137  12,500 12,600    318
 2,600   2,700     27   7,600 7,700                    140  12,600 12,700    323
 2,700   2,800     28   7,700 7,800                    143  12,700 12,800    328
 2,800   2,900     29   7,800 7,900                    146  12,800 12,900    333
 2,900   3,000     30   7,900 8,000                    149  12,900 13,000    338
 3,000   3,100     31   8,000 8,100                    152  13,000 13,100    343
 3,100   3,200     33   8,100 8,200                    155  13,100 13,200    348
 3,200   3,300     35   8,200 8,300                    158  13,200 13,300    353
 3,300   3,400     37   8,300 8,400                    161  13,300 13,400    358
 3,400   3,500     39   8,400 8,500                    164  13,400 13,500    363
 3,500   3,600     41   8,500 8,600                    167  13,500 13,600    368
 3,600   3,700     43   8,600 8,700                    170  13,600 13,700    373
 3,700   3,800     45   8,700 8,800                    173  13,700 13,800    378
 3,800   3,900     47   8,800 8,900                    176  13,800 13,900    383
 3,900   4,000     49   8,900 9,000                    179  13,900 14,000    388
 4,000   4,100     51   9,000 9,100                    182  14,000 14,100    393
 4,100   4,200     53   9,100 9,200                    185  14,100 14,200    398
 4,200   4,300     55   9,200 9,300                    188  14,200 14,300    403
 4,300   4,400     57   9,300 9,400                    191  14,300 14,400    408
 4,400   4,500     59   9,400 9,500                    194  14,400 14,500    413
 4,500   4,600     61   9,500 9,600                    197  14,500 14,600    418
 4,600   4,700     63   9,600 9,700                    200  14,600 14,700    423
 4,700   4,800     65   9,700 9,800                    203  14,700 14,800    428
 4,800   4,900     67   9,800 9,900                    206  14,800 14,900    433
 4,900   5,000     69   9,900 10,000                   209  14,900 15,000    438

Page 34

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                        Tax Table Continued

 IF YOUR INCOME IS      IF YOUR INCOME IS       IF YOUR INCOME IS
 AS     BUT        YOUR AS     BUT        YOUR  AS    BUT                  YOUR
 MUCH   LESS       TAX  MUCH   LESS       TAX   MUCH  LESS                 TAX
 AS     THAN       IS   AS     THAN       IS    AS    THAN                 IS

 15,000 15,100     443  18,500 18,600     618  22,000 22,100               793
 15,100 15,200     448  18,600 18,700     623  22,100 22,200               798
 15,200 15,300     453  18,700 18,800     628  22,200 22,300               803
 15,300 15,400     458  18,800 18,900     633  22,300 22,400               808
 15,400 15,500     463  18,900 19,000     638  22,400 22,500               813
 15,500 15,600     468  19,000 19,100     643  22,500 22,600               818
 15,600 15,700     473  19,100 19,200     648  22,600 22,700               823
 15,700 15,800     478  19,200 19,300     653  22,700 22,800               828
 15,800 15,900     483  19,300 19,400     658  22,800 22,900               833
 15,900 16,000     488  19,400 19,500     663  22,900 23,000               838
 16,000 16,100     493  19,500 19,600     668  23,000 23,100               843
 16,100 16,200     498  19,600 19,700     673  23,100 23,200               848
 16,200 16,300     503  19,700 19,800     678  23,200 23,300               853
 16,300 16,400     508  19,800 19,900     683  23,300 23,400               858
 16,400 16,500     513  19,900 20,000     688  23,400 23,500               863
 16,500 16,600     518  20,000 20,100     693  23,500 23,600               868
 16,600 16,700     523  20,100 20,200     698  23,600 23,700               873
 16,700 16,800     528  20,200 20,300     703  23,700 23,800               878
 16,800 16,900     533  20,300 20,400     708  23,800 23,900               883
 16,900 17,000     538  20,400 20,500     713  23,900 24,000               888
 17,000 17,100     543  20,500 20,600     718  24,000 24,100               893
 17,100 17,200     548  20,600 20,700     723  24,100 24,200               898
 17,200 17,300     553  20,700 20,800     728  24,200 24,300               903
 17,300 17,400     558  20,800 20,900     733  24,300 24,400               908
 17,400 17,500     563  20,900 21,000     738  24,400 24,500               913
 17,500 17,600     568  21,000 21,100     743  24,500 24,600               918
 17,600 17,700     573  21,100 21,200     748  24,600 24,700               923
 17,700 17,800     578  21,200 21,300     753  24,700 24,800               928
 17,800 17,900     583  21,300 21,400     758  24,800 24,900               933
 17,900 18,000     588  21,400 21,500     763  24,900 25,000               938
 18,000 18,100     593  21,500 21,600     768  (1)  For Net Income $25,000 through   
 18,100 18,200     598  21,600 21,700     773   $100,000, the tax is $940 plus 6%    
                                                of the excess over $25,000.
 18,200 18,300     603  21,700 21,800     778  (2)  For a tax year beginning in 1/1/2021, net   
 18,300 18,400     608  21,800 21,900     783         Income over $100,000, the tax is $5,440   
 18,400 18,500     613  21,900 22,000     788         plus 6.2% of the excess over $100,000.

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