Bill > SB233

This bill aims to reform Arkansas trust tax laws to make the state more competitive in attracting trust assets by providing a tax exemption for certain nongrantor trusts. Specifically, the bill creates a new tax exemption for trusts that are administered by an Arkansas-resident trustee and are not considered grantor trusts under federal tax law (as defined in 26 U.S.C. § 671 and related regulations). The legislative intent behind this change is to prevent Arkansas residents from establishing trusts in other states to avoid state-level taxation, thereby keeping trust management and assets within Arkansas. The bill recognizes that other states have been benefiting from trust administration revenues that could potentially be retained within Arkansas. The tax exemption will apply to tax years beginning on or after January 1, 2025, giving financial services professionals and trust administrators time to adapt to the new law. By offering this tax incentive, the state hopes to encourage more trust formation and administration within Arkansas, potentially boosting the state's financial services sector.

Budget and Finance

https://arkleg.state.ar.us/Bills/Detail?id=sb233&ddBienniumSession=2025%2F2025R