Tax & Incentives

Great Business Environment.  If you are looking for a business environment that is cost competitive and friendly to business look no further than Jonesboro, Arkansas.  Our economic development team will create a package of development incentives customized to meet the needs of the business.  Below is information on programs offered by Jonesboro and the State of Arkansas.  


Tax Structure

Jonesboro Sales Tax

  Tax Percentage
State of Arkansas 6.5%
City of Jonesboro 1.0%
Craighead County 1.0%
TOTAL SALES TAX 8.5%
As of September 2016

 

Applicable Ad Valorem Taxes

$48.05 per Assessed Value (Using Nettleton School District) per Thousand.

  Rate
County General .0040
County Road .0021
Library .0020
Policeman’s Pension .0005
Fireman’s Pension .0005
Nettleton School Millage .03895
TOTAL MILLAGE .04805
As of September 2016

 

Rate of Assessment

  Rate
State Corporate Income Tax

Taxable income is apportioned according to a three-factor formula (property, payrolls and sales attributed to Arkansas) with a double-weighted sales factor. 

Taxable Income Tax Rate
First $3,000 1%
Next $3,000 2%
Next $5,000 3%
Next $14,000 5%
Next $75,000 6%
Over $100,000 6.5%

If a business activity is derived from activity inside and outside the state of Arkansas, it is apportioned for taxation according to the percentage of property and payrolls utilized in the state and sales attributable to Arkansas pursuant to the multi-state compact. 

A corporation doing business in Arkansas and sustaining a net operating loss may carry forward the loss to the next succeeding taxable year and annually thereafter for a total period of five years succeeding the year of such loss and deduct it from Arkansas taxable income. 

Qualified biofuels manufacturers investing at least $20 million and creating at least 100 new jobs may receive income tax exemptions for up to 20 years. Qualified windmill blade or component manufacturers classified under NAICS Code 333611 may receive income tax exemptions for up to 25 years based upon the investment, job created, tier status and employee wages.

Corporate Franchise Tax

The chart below lists the franchise tax rates for various entities under Arkansas Code 26-54-104.

Franchise Tax Type Current Rate
Corporation/Bank with Stock 0.3% of the outstanding capital stock; $150 minimum
Corporation/Bank without Stock $300
Limited Liability Company $150
Insurance Corporation Legal Reserve Mutual, Assets Less Than $100 million $300
Insurance Corporation Legal Reserve Mutual, Assets Greater Than $100 million $400
Insurance Company Outstanding Capital Stock Less Than $500,000 $300
Insurance Company Outstanding Capital Stock Greater Than $500,000 $400
Mortgage Loan Corporation 0.3% of the outstanding capital stock; $300 minimum
Mutual Assessment Insurance Corporation $300
Unemployment Insurance Tax (New Business)

A business with no previous employment record in Arkansas is taxed at 3.7% on the first $12,000 of each employee’s earnings until an employment record is established, usually within three years.  

Taxable wage base = $12,000
Rate = 3.7%

Unemployment Insurance Tax (Existing Arkansas Businesses)

Each business’ employment record is determined primarily by its taxable payroll and history of employee voluntary termination. The tax is determined by past experience and the amount of the reserve-ratio. The reserve-ratio is the excess of contributions paid over benefits charged as related to payroll. The higher the reserve-ratio, the lower the tax rate.

Rate = 0.9% - 12.8%

Source:  Arkansas Economic Development Commission, September 2016


Incentives

Pro-Business.  Jonesboro is a pro-business community that partners with the State of Arkansas to provide direct assistance to expanding and new companies.  For assistance with your custom incentive proposal, please contact us at (870) 336-9064

or email Mark Young.

State Incentives

The following highlights job and investment incentives provided by the Arkansas Economic Development Commission.  Eligibility requirements and other information are available at www.ArkansasEDC.com.  Additional incentives may be available to qualifying companies through various economic development entities.

Advantage Arkansas 

The Advantage Arkansas incentive offers a state income tax credit for job creation.  The incentive is based on a company's payroll of new, full-time, permanent employees hired as a result of the project.  To quality for the  Advantage Arkansas program (all tiers), the company's proposed average hourly wage of the new employees hired as a result of the project must be equal to or greater than the lowest county average hourly wage. The average hourly wage threshold for the Advantage Arkansas program is currently $11.05.

This credit cannot offset more than 50 percent of a business’ income tax liability in any one year.  It can be carried forward for nine years beyond the tax year in which the credit was first earned. The employees included in the added payroll for the project are required to be Arkansas taxpayers and the credit begins in the tax year that the new employees are hired.  This income tax credit is earned each tax year for a period of five years.

Tax Back 

The Tax Back incentive provides sales and use tax refunds on a qualifying business' purchase of building materials and taxable machinery and equipment.   Qualifying businesses must invest at least $100,000 and either 1) sign a job creation agreement under the Advantage Arkansas or Create Rebate programs within twenty-four (24) months of signing the Tax Back agreement or 2) have met the requirements of an Advantage Arkansas or Create Rebate agreement within the previous 48 months.  An endorsement resolution from a local governing authority authorizing the refund of its local taxes must also be obtained by applicants.  Qualification criteria must be met under the requisite Advantage Arkansas or Create Rebate program in which the applicant is participating, and must be approved by the Arkansas Economic Development Commission.  

The refund of sales and use taxes will not include the refund of taxes dedicated to the Educational Adequacy Fund provided in §19-5-1227, or the taxes dedicated to the Conservation Tax Fund provided in §19-6-484; which totals one percent. The state tax rate is 6.5 percent so the eligible refund would be 5.5 percent.  Criteria for eligibility can be found at the Arkansas Economic Development Commission website at www.arkansasedc.com 

Criteria for eligibility can be found at the Arkansas Economic Development Commission website at www.ArkansasEDC.com.  

InvestArk 

InvestArk is a sales and use tax credit program available to businesses established in Arkansas who meet the following criteria:  
1.  Must be located in Arkansas for two years or longer
2.  Must invest invest five million dollars ($5,000,000) or more at a single location in plant or equipment for new construction, expansion or modernization

To receive this incentive the business must be approved for the program prior to beginning construction or incurring eligible project costs.  In addition, the company must obtain a direct-pay sales and use tax permit from the State of Arkansas. Basedon the total eligible project cost, a credit against the company's state direct-pay sales and use tax liability (equal to one-half percent (1/2%) above the state of Arkansas sales and use tax rate in effect at the time of application, is earned.  The percentage that may be earned as credit is currently seven percent (7%) of eligible project expenditures.  In any year, the tax credits claimed under this program cannot exceed fifty percent (50%) of the company's sales and use tax liability on taxable purchases.  The Arkansas Department of Finance and Administration will audit all reported expenditures.  

The credit is earned in the year the eligible expenditure is made and can be applied against the company's state direct-pay sales and use tax liability in the year following the year of expenditure. Any unused credits may be carried forward for a period of up to five (5) years.  The applicant's total project expenditures must be incurred within four (4) years of the date the project is approved by the Arkansas Economic Development Commission.  

Create Rebate 

Create Rebate incentives are negotiated and offered at the discretion of the Executive Director of the Arkansas Economic Development Commission.  The Create Rebate program provides annual cash payments based on a company’s annual payroll for new, full-time, permanent employees. In order to qualify, a company must create a minimum of $2 million annually in new payroll. The minimum payroll must be met within 24 months of the effective date of the financial incentive agreement. No benefits may be claimed until the $2 million annual payroll threshold is met.  Create Rebate benefits are available after the business certifies to the Arkansas Department of Finance & Administration (ADFA) that it has fulfilled the minimum payroll requirements and the reported payroll has been verified. The percentage of the benefit depends on the tier assignment of the county where the job creation occurs.

ArkPlus 

The ArkPlus incentive is a state income tax credit program that provides tax credits of ten percent (10%) of the total investment in a new location or expansion project. This discretionary incentive is offered in highly competitive situations.  ArkPlus requires both a minimum investment and a minimum payroll of new, full-time, permanent employees hired as a result of the project, depending on the tier in which the business locates. Total project expenditures must be incurred within four (4) years of the date the project is approved by the Arkansas Economic Development Commission.  New, full-time, permanent employees must be hired within 48 months of the date the financial agreement is signed.  The income tax credits may be used to offset fifty percent (50%) of the Arkansas income tax liability in the tax year the credit is earned. Any unused credits may be carried forward for nine (9) years beyond the tax year in which the credit was first earned.

Infrastructure Grants (Governor's Quick Action Closing Fund, Community Development Block Grants)

The Arkansas Economic Development Commission shares the cost of project infrastructure needs by committing grants from state and federal infrastructure funds. The amount of assistance committed is dependent upon the strength of the company, number of jobs, average wage, project investment and costs associated with facility/site improvements.  Criteria for eligibility can be found at the Arkansas Economic Development Commission website at www.ArkansasEDC.com.  

Equity Investment Tax Credit

The Equity Investment Incentive Program is a discretionary incentive targeted toward new, technology-based businesses paying wages in excess of the state or county average wage. If offered, this program allows an approved business to offer an income tax credit to investors purchasing an equity investment in the business.  The income tax credit/credits issued under this program are equal to 33 1/3% of the amount invested by an investor in an eligible business.  The income tax credit earned may be used to offset 50% of the investor’s Arkansas income tax liability in any one tax year. Any unused credit may be carried forward for a period of nine years. The income tax credit earned may be sold upon approval by the Arkansas Economic Development Commission.  

Research and Development Incentives

Arkansas’s Research and Development incentive programs are intended to provide incentives for university-based research, in-house research, and research and development in start-up, technology-based enterprises. Tax credits under these programs may be carried forward for nine years and may offset up to 100% of a business’ tax liability in a given year.

Specialized Incentives

Specialized incentives may be offered to businesses in the following sectors:  Digital Production/Film Requirements; Non-Profit Incentive Program; and Tourism Development Incentives.

Source:  Arkansas Economic Development Commission, September 2016