Arkansas Extends a Helping Hand: New Sales Tax Exemption for Qualified Nonprofits!
Great news for the backbone of many Arkansas communities – our nonprofit organizations! The state has enacted significant new legislation, Act 1007 (H.B. 1671), Laws 2025, providing a much-anticipated sales and use tax exemption for sales made to eligible nonprofits. This move is designed to provide substantial support for the vital community services these organizations deliver across Arkansas.
Who Qualifies for This Exemption?
To be eligible for this valuable sales tax exemption, nonprofit organizations must meet two key criteria:
- They must have an annual operating budget of less than $200,000.
- They must perform charitable community-based services within Arkansas that directly benefit residents in need of assistance.
What is Covered by the Exemption?
The exemption broadly applies to sales of:
- Tangible personal property
- Specified digital products
- Digital code
- Services
Important Exclusions to Note:
While the exemption is wide-ranging, certain items remain taxable. It is crucial for qualifying nonprofits to be aware of these exclusions:
- Motor vehicles, motorboats, aircraft/airplanes
- Alcoholic beverages, tobacco
- Computers
- Materials used to construct residential or commercial structures
- Household appliances, mobile/cellular telephones
- All-terrain vehicles
- Televisions
When Does This Go Into Effect?
This new exemption will become effective ninety days after the adjournment of the 2025 Legislative session. It will then be applicable on the first day of the calendar quarter following that effective date. Nonprofits should monitor the legislative calendar to pinpoint the exact start date.
How to Apply for Your Exemption Certificate:
Nonprofit organizations eager to take advantage of this benefit must file an application for an exemption certificate with the Secretary of the Department of Finance and Administration.
This is a monumental development for Arkansas-s nonprofit sector. By reducing the financial burden of sales taxes, the state is effectively freeing up more resources that can be directly channelled back into community programs and services, ultimately benefiting those who need it most.
For a comprehensive understanding of the legislation, you can refer to the official bill here: https://www.arkleg.state.ar.us/Bills/Detail?ddBienniumLooParam=2025&type=HB&number=1671
Stay connect with SGM to ensure compliance with these new regulations.
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