Bill > SB567

This bill amends Arkansas tax law to modernize the method for calculating and sourcing business income for multistate operations, primarily shifting from a cost-of-performance approach to a market-based sourcing method. The key provisions include redefining "apportionable income" to more comprehensively include income from business activities and property, changing how receipts from different types of sales and services are allocated to the state, and introducing a gradual transition for sourcing receipts from tangible personal property sales. The bill establishes that nonresident corporations without physical presence in Arkansas may be subject to state income tax if their Arkansas receipts exceed $250,000 in the current or preceding tax year. The new sourcing rules will progressively shift from allocating a high percentage of receipts to Arkansas to eventually sourcing 100% of receipts outside the state by 2030. The bill also provides more detailed guidelines for how businesses can petition for alternative allocation methods if the standard apportionment rules do not fairly represent their business activity, and gives the Secretary of the Department of Finance and Administration additional authority to establish rules for determining appropriate allocation methods. The changes will take effect for tax years beginning on or after January 1, 2026.

Budget and Finance

https://arkleg.state.ar.us/Bills/Detail?id=sb567&ddBienniumSession=2025%2F2025R