Arkansas Governor Sarah Huckabee Sanders signed new legislation on 17 April 2025, which introduces tax incentives to attract corporate headquarters and encourage modernisation investments.

Tax credits for new corporate headquarters relocations

The House Bill 1922 amends Arkansas Code Section 15-4-2706, which introduces a refundable income tax credit of up to 50% of payroll for new full-time employees tied to the relocation of a corporate headquarters.

The bill includes a 10% reduction for unclaimed credits after 12 months and full forfeiture after 24 months, as well as termination of financial incentives if payroll figures aren’t certified within four years, with possible extensions.

Incentives for relocating corporate headquarters to Arkansas vary by county tier. The Arkansas Economic Development Commission Director will ensure compliance with county-tier wage thresholds on an annual basis. Businesses can choose between income tax credits and sales-and-use tax credits for their investments, depending on their investment and payroll requirements.

These provisions take effect for tax years beginning on or after 1 January 2026.

Tax credits for modernisation and automation 

The House Bill 1935 updates Arkansas Code Section 15-4-2703(29)(C) to introduce a new “modernisation and automation” tax credit, which is limited to USD 2 million per fiscal year and covers up to 5% of eligible project costs.

Projects must involve at least USD 5 million in investments, including land, buildings, and equipment and hold a direct-pay sales and use tax permit from the Department of Finance and Administration.

Additionally, projects should maintain employment levels throughout the project’s duration. Tax credits cannot be combined with other incentives for the same project, and any breach will result in forfeiture.

These changes will take effect on 1 October 2025.