Investment Incentives

Tax Back (Sales and Use Tax Refund)

The Tax Back program provides sales and use tax refunds on the purchase of building materials and taxable machinery and equipment to qualified businesses investing the minimum required based on the tier in which the company locates and who either a) sign a job creation agreement under the Advantage Arkansas or Create Rebate programs within 24 months of signing the Tax Back agreement or b) have signed an Advantage Arkansas or Create Rebate agreement within the previous 48 months.

View the Arkansas Incentives Tier Map

Applicants for Tax Back must also obtain an endorsement resolution from a local governing authority authorizing the refund of its local taxes. Applicants must meet the qualification criteria under the requisite Advantage Arkansas or Create Rebate program in which they are participating and must be approved by AEDC.

The refund of sales and use taxes shall not include the refund of state taxes dedicated to the Educational Adequacy Fund provided in §19-5-1227 or the state taxes dedicated to the Conservation Tax Fund provided in §19-6-484; which totals 1%. The state tax rate is 6.5%, therefore the eligible refund amount is 5.5%.

Eligibility

• Manufacturers in NAICS codes 31-33
• Businesses primarily engaged in the design and development of software, digital content production and preservation, computer processing, data preparation services or information retrieval services. Eligible computer-related businesses must derive at least 51% of their revenue from out-of-state sales and pay an average in excess of 125% of the lesser of the state or county average hourly wage to employees whose payroll is subject to incentive benefits.
• Businesses primarily engaged in film and digital product productions and post-productions that derive at least 51% of their revenue from out-of-state sales and pay an average in excess of 125% of the lesser of the state or county average hourly wage to employees whose payroll is subject to incentive benefits.
• Distribution centers that derive 75% of their sales revenue from out-of-state customers
• Intermodal facilities with more than one mode of interconnected movement of freight, commerce, or passengers.
• Office sector businesses that support primary business needs and that are non-retail businesses deriving at least 75% of their sales revenue from out-of-state.
• National or regional corporate headquarters as classified in the NAICS code 551114
• Businesses primarily engaged in research and development in the physical, engineering, and life sciences as classified in the NAICS codes 541713, 541714, 541715.
• Scientific and technical services businesses that derive at least 51% of their revenue from out-of-state sales and pay an average in excess of 150% of the lesser of the state or county average hourly wage to employees whose payroll is subject to incentive benefits.
• Businesses primarily engaged in support activities for air transportation, NAICS Code 488190, that derive at least 75% of their revenue from out-of-state sales.
• Businesses primarily engaged in support activities for rail transportation, NAICS Code 488210, that derive at least 75% of their revenue from out-of-state sales.

Modernization and Automation Tax Credit (MATC)

• Effective Date: October 1, 2025
• Discretionary program providing a tax credit of up to 5% on eligible project costs for a modernization and automation project
• The tax credit can either be a sales and use tax credit or an income tax credit
• The project must be completed within 6 years and requires a 24-month job maintenance period after completion

Process

• Company discusses the project with AEDC and submits an intake form
• AEDC evaluates the project and then provides the company with an incentive proposal that may include up to a 5% Modernization and Automation Tax Credit
  • Project costs may not be expended before the proposal from AEDC
• Application (project costs must be after the application and approval from AEDC)
• Agreement
  • Must maintain yearly average payroll and employment in the state during the course of the project and 24 months after
    

Eligibility

• Eligible businesses must:
  • Have been in continuous operations in the state for at least 2 years
  • Incur a minimum of $25M in project costs (lease payments for first 5 years can count towards investment threshold)
  • Hold a direct pay sales and use tax permit with the Department of Finance and Administration before filing an application.
  • Receive a positive cost benefit analysis (CBA) from the AEDC
• Project Costs (same as the Consolidated Incentive Act definition found in A.C.A. § 15-4-2703(29)
  • Construction of a new plant or facility;
    • including without limitation land, building, machinery and equipment, or support infrastructure;
  • Expansion of an established plant or facility by adding to the building, production equipment, or support infrastructure; or
  • Modernization of an established plant or facility through the replacement of production or processing equipment or support infrastructure that improves efficiency or productivity.
  • “Project” does not include:
  • Expenditures for routine repair and maintenance that do not result in new construction, expansion or modernization;
  • Routine operating expenditures;
  • Expenditures incurred at multiple facilities; or
  • The purchase or acquisition of an existing business unless:
    • There is sufficient documentation that the existing business was closed; and
    • The purchase of the existing business will result in the retention of the jobs that would have been lost due to the closure.

Tax Credit Administration

• Max of $2M tax credit may be used to offset tax liability in a state fiscal year, 5-year carry forward for any unused portion of tax credit
• The company will report to DFA on a calendar year basis and then receive the tax credit
• The company shall not be able to combine the investment tax credit (ArkPlus) nor the increased tax refund for major maintenance and improvement with the Modernization and Automation Tax credit for the same project.

INCENTIVES