Investment and Job Creation Incentives

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 easy to use. The Arkansas Economic Development Commission will focus on your business's specific needs, conduct a cost-benefit analysis and design a tailored incentive package.

Arkansas's incentives, which were updated in 2003, are based on payroll instead of number of jobs and are determined according to location. Counties are divided into four tiers, 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 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.

The new incentives may be combined to allow for more flexibility.

There are special incentives for start-up businesses in six targeted sectors.

Rules

Tier Map

Wage Thresholds

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 two years or longer 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. The business must obtain a direct-pay sales and use tax permit from the State of Arkansas. Total project expenditures must be incurred within four years of the project plan approval. All projects will be audited upon completion to confirm the tax credits.

The sales and use tax credit earned is a percentage of eligible project cost. A credit against the business's state sales and use tax liability is authorized equal to ½% above the state sales and use tax rate in effect at the time a financial incentive agreement is signed.

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 years.


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.

Tier
Payroll Threshold
Benefit Based on Payroll
of New, Full-time,
Permanent Employees
1
$125,000
1% of payroll
2
$100,000
2% of payroll
3
$75,000
3% of payroll
4
$50,000
4% of payroll
(See Tier Map)

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

Arkansas is segmented into four tiers based on poverty rate, population growth, per capita income and unemployment rate. (See Tier Map)

The 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

Offered at the discretion of the director of the Arkansas Economic Development Commission in highly competitive situations

Tier
Benefit Based on Payroll
of New, Full-time,
Permanent Employees
1
3.9%
2
4.25%
3
4.5%
4
5.0%
(See Tier Map)

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 each tier of counties, a minimum payroll of new, full-time, permanent employees of $2 million annually is required. The minimum payroll threshold must be met.

Incentives are available after the business has fulfilled the minimum payroll requirements and certified the payroll amount to the Arkansas Department of Finance and Administration, within 24 months of the date of the financial agreement.


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

Offered at the discretion of the director of the Arkansas Economic Development Commission in highly competitive situations

Tier
Minimum Investment
Minimum Payroll
1
$5,000,000
$2,000,000
2
$3,750,000
$1,500,000
3
$3,000,000
$1,200,000
4
$2,000,000
$800,000
(See Tier Map)

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 is segmented 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 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 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.