A bill making its way through the Arkansas Legislature would lower the state sales and use tax rate, which is currently 6.5%. If Senate Bill 289 is enacted, the state’s sales tax rate would drop to 6.375%.
A new sales tax rate would affect any businesses with Arkansas sales tax nexus. This includes in-state businesses and remote retailers that have economic nexus with the state.
Products subject to the lower sales tax rate would include tangible personal property, specified digital products, digital codes, and taxable services.
The legislation doesn’t reference any Arkansas sales tax exemptions. However, food and food ingredients would continue to be subject to the state reduced food tax, which is 0.125%. The new state sales tax rate also wouldn’t apply to used motor vehicles, trailers, and semitrailers that are taxed under § 26-52-324.
SB 289 points out that Arkansas has the third highest combined state and local sales tax rate in the nation. A high sales tax rate is needed to fund the Property Tax Relief Trust Fund.
Yet since the Property Tax Relief Fund has a “growing balance,” some lawmakers want to lower the tax rate “to provide relief from sales tax for all Arkansans.”
