Investment and Job Creation Incentives

Summary

The State of Arkansas operates the way businesses do, proactively anticipating opportunities and quickly responding to challenges in innovative ways. This approach, combined with our incentive programs, makes Arkansas a profitable choice for locating or expanding a business.

Arkansas's performance-based incentives are nationally competitive and user-friendly. The Arkansas Economic Development Commission will focus on your business's specific needs, and design an incentive package to accomodate your needs.

The Consolidated Incentive Act of 2003 updated many of Arkansas’s incentive programs to locate them under one code of law, §15-4-2701 et seq., and make the combination of incentives more flexible. Arkansas's job-creation incentives are based on payroll instead of number of jobs and use a tier system to determine the qualification criteria and benefits, depending on where the business locates or expands their operations in Arkansas. Arkansas’s tier system ranks each county, based on poverty rate, unemployment, per capita income and population growth. Tiers are assigned annually on July 1, based on the previous year's statistics.

In addition to an array of competitive incentives, when a business locates in Arkansas, it can take advantage of the following additional benefits:

• Favorable unemployment insurance and workers' compensation rates;
• A reduced sales tax rate on manufacturing utilities;
• A sales/use tax exemption on manufacturing machinery and equipment;
• A right-to-work state, as guaranteed by the Arkansas Constitution; and
• Favorable individual and corporate income tax rates.

AEDC's project managers work with existing industries in their assigned regions. However, they can work on new-business projects anywhere in Arkansas. They will be happy to provide additional information or clarification regarding any of Arkansas's incentives.

• Advantage Arkansas (Income Tax Credit)

• InvestArk (Sales and Use Tax Credit)

Rules

• Consolidated Incentive Act Rules 2009

Tier Map

• Tier Map

Wage Thresholds

• County Wage Thresholds for CIA

Investment Incentives

Tax Back (Sales and Use Tax Refund)

Advantage Arkansas participants investing at least $100,000 are eligible for the Tax Back program. This program provides a refund of sales and use taxes for building materials and taxable machinery and equipment associated with the approved project.

The business must sign a job-creation agreement under the Advantage Arkansas program within 24 months of signing the Tax Back agreement.

Applicants for Tax Back must obtain an endorsement resolution from the local governing authority that authorizes the refund of its local taxes. Applicants must meet the same qualification criteria as Advantage Arkansas and must be approved by the Arkansas Economic Development Commission.

Eligibility
The Tax Back incentive is available for non-retail businesses engaged in commerce for profit that fall into one or more of the following categories:

• Manufacturers in NAICS codes 31-33
• Businesses primarily engaged in the design and development of prepackaged software, digital content production and preservation, computer processing, data preparation services or information retrieval services. Eligible computer-related businesses must derive at least 75 percent of their revenue from out-of-state sales
• Businesses primarily engaged in motion picture production that derive at least 75% of their revenue from out-of-state sales
• Distribution centers, including e-commerce distributors, that derive at least 75% of their revenue from out-of-state sales
• Office sector businesses that derive at least 75% of their revenue from out-of-state sales
• National or regional corporate headquarters as classified in the NAICS code 551114
• Firms primarily engaged in commercial, physical and biological research as classified in the NAICS code 541710
• Scientific and technical services businesses. The firms must derive at least 75% of their revenue from out-of-state sales. The average hourly wage paid by these businesses must exceed 150% of the county or state average hourly wage, whichever is less.

If you have any questions concerning the Tax Back Program, please call Michael Almond at the Arkansas Economic Development Commission at 1-800-ARKANSAS or 501-682-5277.

InvestArk (Sales and Use Tax Credit)

InvestArk is a sales and use tax credit program available to businesses established in Arkansas for at least two years that invest $5 million or more in plant or equipment for new construction, expansion or modernization.

The business must be approved for the program prior to beginning construction or incurring eligible project costs. The business must obtain a direct-pay sales and use tax permit from the State of Arkansas. All project expenditures must be incurred within four (4) years of the project eligibility date. All projects will be audited upon completion to confirm the tax credits.

The sales and use tax credit earned under the InvestArk program is based upon a percentage of eligible project cost. The percentage of credit that may be authorized is equal to ½% above the state sales and use tax rate in effect at the time a financial incentive agreement is signed.  Currently the percentage that may be earned as credit is 6.5% of eligible project expenditures.

The credit may be used to offset up to 50% of the business' sales and use tax liability on taxable purchases. The credit is earned in the year the eligible expenditure is made and can be applied against the business's state direct-pay sales and use tax liability in the year following the year of expenditure. If the entire credit cannot be used, the remainder may be carried forward for five (5) years.

An application for the InvestArk program may be obtained by contacting AEDC’s Business Development Division at (501) 682-7675.

Eligibility
The InvestArk Arkansas incentive is available for non-retail businesses engaged in commerce for profit that fall into one or more of the following categories:

• Manufacturers in NAICS codes 31-33
• Businesses primarily engaged in the design and development of prepackaged software, digital content production and preservation, computer processing, data preparation services or information retrieval services. Eligible computer-related businesses must derive at least 75% of their revenue from out-of-state sales
• Businesses primarily engaged in motion picture production that derive at least 75% of their revenue from out-of-state sales
• Distribution centers, including e-commerce distributors, that derive at least 75% of their revenue from out-of-state sales
• Office sector businesses that derive at least 75% of their revenue from out-of-state sales
• National or regional corporate headquarters as classified in the NAICS code 551114
• Firms primarily engaged in commercial, physical and biological research as classified in the NAICS code 541710
• Scientific and technical services businesses. The firms must derive at least 75% of their revenue from out-of-state sales. The average hourly wage paid by these businesses must exceed 150% of the county or state average hourly wage, whichever is less.

If you have any questions concerning the InvestArk Program, please call Michael Almond at the Arkansas Economic Development Commission at 1-800-ARKANSAS or 501-682-5277.

Job Creation Incentives

Advantage Arkansas
(Income Tax Credit)

Advantage Arkansas offers a state income tax credit for job creation based on the payroll of new, full-time, permanent employees hired as a result of the project.

In all tiers, in order to qualify for the Advantage Arkansas program, the proposed average hourly wage of the new employees hired as a result of the project must be equal to or greater than the lowest county average hourly wage.  Currently, the average hourly wage threshold for the Advantage Arkansas program is $10.03.

The payroll threshold for qualifying for Advantage Arkansas and the benefit received depends on the tier in which the business locates or expands.

Arkansas's counties are ranked into four tiers based on poverty rate, population growth, per capita income and unemployment rate. (See Tier Map)

The Advantage Arkansas income tax credit is earned each tax year for a period of five years. The income tax credit cannot offset more than 50 percent of a business' income tax liability in any one year and may be carried forward for nine years beyond the tax year in which the credit was first earned. The credit begins in the tax year in which the new employees are hired. Employees must be Arkansas taxpayers.

Eligibility
The Advantage Arkansas incentive is available for non-retail businesses engaged in commerce for profit that fall into one or more of the following categories:

• Manufacturers in NAICS codes 31-33
• Businesses primarily engaged in the design and development of prepackaged software, digital content production and preservation, computer processing, data preparation services or information retrieval services. Eligible computer-related businesses must derive at least 75% of their revenue from out-of-state sales
• Businesses primarily engaged in motion picture production that derive at least 75% of their revenue from out-of-state sales
• Distribution centers, including e-commerce distributors, that derive at least 75% of their revenue from out-of-state sales
• Office sector businesses that derive at least 75% of their revenue from out-of-state sales
• National or regional corporate headquarters as classified in the NAICS code 551114
• Firms primarily engaged in commercial, physical and biological research as classified in the NAICS code 541710
• Scientific and technical services businesses. The firms must derive at least 75% of their revenue from out-of-state sales. The average hourly wage paid by these businesses must exceed 150% of the county or state average hourly wage, whichever is less.

If you have any questions concerning the Advantage Arkansas Program, please call Michael Almond at the Arkansas Economic Development Commission at 1-800-ARKANSAS or 501-682-5277.

Discretionary Incentives

(Negotiated by the Arkansas Economic Development Commission in highly competitive situations)

Create Rebate Program

The Create Rebate program may be offered at the discretion of the director of the Arkansas Economic Development Commission in highly competitive situations

Create Rebate provides annual cash payments based on a company's annual payroll for new, full-time, permanent employees. The benefit depends on the tier in which the company locates. (See Tier Map)

In all tiers, a minimum payroll of new, full-time, permanent employees of $2 million annually is required. The minimum payroll threshold must be met within 24 months of the effective date of the financial incentive agreement.  No benefits may be claimed until the $2 million annual payroll threshold is met.

Eligibility
The Create Rebate incentive is available for non-retail businesses engaged in commerce for profit that fall into one or more of the following categories:

• Manufacturers in NAICS codes 31-33
• Businesses primarily engaged in the design and development of prepackaged software, digital content production and preservation, computer processing, data preparation services or information retrieval services. Eligible computer-related businesses must derive at least 75% of their revenue from out-of-state sales
• Businesses primarily engaged in motion picture production that derive at least 75% of their revenue from out-of-state sales
• Distribution centers, including e-commerce distributors, that derive at least 75% of their revenue from out-of-state sales
• Office sector businesses that derive at least 75% of their revenue from out-of-state sales
• National or regional corporate headquarters as classified in the NAICS code 551114
• Firms primarily engaged in commercial, physical and biological research as classified in the NAICS code 541710
• Scientific and technical services businesses. The firms must derive at least 75% of their revenue from out-of-state sales. The average hourly wage paid by these businesses must exceed 150% of the county or state average hourly wage, whichever is less.

If you have any questions concerning the Create Rebate Program, please call Michael Almond at the Arkansas Economic Development Commission at 1-800-ARKANSAS or 501-682-5277.

ArkPlus

The ArkPlus program may be offered at the discretion of the director of the Arkansas Economic Development Commission in highly competitive situations

ArkPlus is a state income tax credit program that provides tax credits of 10% of the total investment in a new location or expansion project.

ArkPlus requires both a minimum investment and a minimum payroll of new, full-time, permanent employees hired as a result of the project, depending on the tier in which the business locates. Arkansas's counties are ranked into four tiers based on poverty rate, population growth, per capita income and unemployment rate. (See Tier Map)

Total project expenditures must be incurred within four (4) years of the date the project is approved by AEDC. New, full-time, permanent employees must be hired within 24 months of the date the financial agreement is signed.

The income tax credits may be used to offset 50% of the Arkansas income tax liability in the tax year the credit is earned. Any unused credits may be carried forward for nine (9) years beyond the tax year in which the credit was first earned.

Eligibility
The ArkPlus incentive is available for non-retail businesses engaged in commerce for profit that fall into one or more of the following categories:

• Manufacturers in NAICS codes 31-33
• Businesses primarily engaged in the design and development of prepackaged software, digital content production and preservation, computer processing, data preparation services or information retrieval services. Eligible computer-related businesses must derive at least 75% of their revenue from out-of-state sales
• Businesses primarily engaged in motion picture production that derive at least 75% of their revenue from out-of-state sales
• Distribution centers, including e-commerce distributors, that derive at least 75% of their revenue from out-of-state sales
• Office sector businesses that derive at least 75% of their revenue from out-of-state sales
• National or regional corporate headquarters as classified in the NAICS code 551114
• Firms primarily engaged in commercial, physical and biological research as classified in the NAICS code 541710
• Scientific and technical services businesses. The firms must derive at least 75% of their revenue from out-of-state sales. The average hourly wage paid by these businesses must exceed 150% of the county or state average hourly wage, whichever is less.

If you have any questions concerning the ArkPlus Program, please call Michael Almond at the Arkansas Economic Development Commission at 1-800-ARKANSAS or 501-682-5277.