Bill > SB377

This bill creates the Grocery Tax Relief Act, which aims to fully exempt food and food ingredients from state sales and use taxes starting January 1, 2026. The bill removes the existing 1.375% state tax on groceries while allowing municipal and county taxes on food to remain in place. The legislation defines "food" and "food ingredients" broadly, excluding only prepared foods, and ensures that basic grocery items like unprepared meats, eggs, and uncooked foods will be tax-exempt. The bill makes corresponding technical amendments to various sections of Arkansas tax code to remove references to the previous grocery tax, adjusts how tax revenues are calculated and distributed, and eliminates certain previous provisions related to potential future taxation of groceries. Notably, the tax exemption will apply to both sales taxes (when purchasing groceries) and use taxes (when bringing groceries into the state), effectively creating a comprehensive exemption for most grocery purchases. The bill is scheduled to take effect on January 1, 2026, giving state agencies and retailers time to prepare for the change.

Budget and Finance

https://arkleg.state.ar.us/Bills/Detail?id=sb377&ddBienniumSession=2025%2F2025R