Plentiful & Powerful Incentive Programs
INCENTIVES
This summary provides a general outline of the types of incentives offered by the Arkansas Department of Economic Development (ADED). ADED considers a variety of factors including business/industrial capital investment, payroll, workforce development, and community support in developing an incentive package. The Department of Economic Development negotiates incentive packages.
INVESTARK
The requirements for InvestArk are the same in all tiers. The InvestArk sales and use tax credit is available to businesses established in Arkansas for two years or longer that invest $5 million or more at a single location in plant or equipment for new construction, expansion, or modernization.
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ADVANTAGE ARKANSAS
The Advantage Arkansas program provides an income tax credit to an eligible company for creating new jobs after the company has signed a financial incentive agreement with ADED. The annual payroll of the new employees must meet the payroll threshold for the tier in which the business is located. The income tax credit is a percentage of the annual payroll of the new full-time permanent employees and is earned each tax period for a period of five years. Unused credits may be carried forward for nine years beyond the year in which the credit was first earned.
You may download the current Tier Map from ADED’s web site. Go to the ADED website and click on “Tier Map”.
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TAX BACK
The Tax Back program provides sales and use tax refunds on the purchase of building materials and machinery and equipment to qualifying businesses that create new jobs as a result of construction, expansion, or facility modernization projects in Arkansas.
To qualify for the Tax Back program, a business must obtain an endorsement resolution from the local governing authority and be approved by the Arkansas Department of Economic Development.
The Tax Back program cannot be used by itself. Within two years of signing the Tax Back agreement, the business must sign a job creation agreement under the Advantage Arkansas program or the Create Rebate program.
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CREATE REBATE
The Create Rebate program requires a minimum payroll of $2,000,000 within 24 months for the new full-time permanent employees hired after the date of the financial incentive agreement.
Under terms negotiated by ADED, this program provides businesses a financial incentive equal to 3.9 to 5 percent of the annual payroll of the new full-time permanent employees. The financial incentive percentage depends on the tier in which the business is located.
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ARKPLUS
The ArkPlus Program is negotiated by ADED in highly competitive situations. The ArkPlus program requires a minimum investment and minimum payroll based on the payroll of new full-time permanent employees hired after the date of a financial incentive agreement signed with ADED. The minimum investment and the minimum payroll requirements are dependent on the tier in which the business is located and vary from a $2 million investment and $1 million payroll in Tier 4 to a $5 million investment and a $2 million payroll in Tier 1.
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TARGETED BUSINESS INCENTIVES
Businesses that qualify as “targeted businesses” may qualify for three special incentives designed to help new, knowledge-based businesses in their early years.
Companies that are doing business in a targeted business sector and pay wages that are 150% to 180% of the state or county average wage and that meet the requisite payroll thresholds may qualify for:
• The Targeted Tax Back program, which provides a refund of sales, and use taxes paid on the purchase of building materials and machinery and equipment associated with the approved project.
• A 10% tax credit based on payroll
• A 33% tax credit on eligible research expenditures
• The Department of Economic Development may sell the income tax credits earned under this program upon approval.
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RESEARCH & DEVELOPMENT INCENTIVES
The different research and development tax credits are intended to provide incentives for university-based research, in-house research of several kinds, and research and development in start-up, technology-based enterprises. It is important for the applicant to understand the different incentives and to select the most appropriate for the eligible research and development activity. In summary:
1. The incentive for research and development with universities is intended for firms of virtually every size and stage of development, may compliment in-house research and may be combined with in-house research incentives.
2. The incentives for in-house research are intended for: (a) the on-going in-house research programs of existing eligible businesses; (b) eligible “targeted” businesses which have been in operation for less than five years that are engaged in in-house research; and (c) eligible businesses engaged in strategic research and development.
3. The incentive for research and development under programs of the Arkansas Science and Technology Authority is intended for companies in the earliest states of development and for knowledge-based companies that require a continuing research and development program to remain competitive.
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TOURISM DEVELOPMENT
The Arkansas Tourism Development Act provides state sales tax credits and income tax credits to businesses operating or intending to operate an approved tourism attraction project.
Sales tax credits shall be determined in accordance with the following criteria:
1. Eligible minimum project costs must be $500,000;
2. The percentage of sales tax credits shall be determined by total approved project costs:
• Projects with expenditures of $500,000 but less than $1 million are eligible for a 10% of the eligible project expenditures;
• Projects with expenditures of more than $1 million are eligible for a credit of 25% of the eligible project expenditures;
3. The sales tax credit may only be applied against the increased sales tax liability of the approved project; and
4. Other review criteria requested by ADED may be needed to determine whether the tourism attraction project meets the intent of the act.
5. Additionally, eligible businesses may receive an income tax credit equal to 100 times the average hourly wage of each new full-time permanent employee, with a $3,000 cap per employee. The multiplier increases from 100 to 400 with a $6,000 cap per employee in a “high unemployment county”. New full-time permanent employees must be Arkansas taxpayers.
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OTHER PROGRAMS OF INTEREST
Existing Workforce Training Program – provides financial assistance to Arkansas companies for upgrading the skills of their existing workforce. Secondary objectives are to build the capacity within state-supported educational institutions to supply the on-going training needs of Arkansas business and industry.
For more information on this program, please contact: Gay Johnson, ADED-Training, 1 Capitol Mall, Little Rock, Ar 72201, phone 501.682.7323
Small Business Loan Program - The Small Business Loan Program was created to stimulate small businesses by providing up to one-half of the amount of participation loans offered by approved community lenders.
A small business is one with fewer than 50 full-time employees and less than $1 million in annual gross sales, excluding agricultural production.
The project must provide reasonable expectations for job creation. ADED’s share cannot exceed 50% of the total loan amount and cannot be less than $2,500 or more than $40,000.
Public Roads Improvement Credit - The Arkansas Public Roads Improvement Credit Act of 1999 provides an income tax credit to any individual , fiduciary or corporation subject to Arkansas state income tax that contributes to the Public Road Incentive Fund of the Department of Economic Development. The contribution may be made to a general improvement fund or designated for a specific project that is approved by the Director.
The credit cannot exceed 33 percent of the taxpayer’s contribution. In any one-tax year, the credit cannot exceed 50 percent of the taxpayer’s net Arkansas state income tax liability after all other credits and reductions have been calculated. Any amount over 50 percent can be carried forward up to three years.
Freeport Law – Arkansas has a Freeport Law that exempts from property tax those finished goods and raw materials in transit or awaiting shipment to out-of-state customers.
Customized Training Incentives – The Customized Training Incentive Program provides pre-employment training for Arkansas workers to meet the skills needed in the state’s new and expanding businesses. When eligible companies locate or expand operations in Arkansas, the Customized Training Incentives team works with the Community and Business Development team to negotiate with the business. After a commitment to the state is made, a specific Customized Training Incentives coordinator is assigned to develop the training plan with the business.
For full details on all incentives offered by the Arkansas Department of Economic Development you may visit their web site at www.1800arkansas.com.
Return to the top of the page
This summary provides a general outline of the types of incentives offered by the Arkansas Department of Economic Development (ADED). ADED considers a variety of factors including business/industrial capital investment, payroll, workforce development, and community support in developing an incentive package. The Department of Economic Development negotiates incentive packages.
INVESTARK
The requirements for InvestArk are the same in all tiers. The InvestArk sales and use tax credit is available to businesses established in Arkansas for two years or longer that invest $5 million or more at a single location in plant or equipment for new construction, expansion, or modernization.
Return to the top of the page
ADVANTAGE ARKANSAS
The Advantage Arkansas program provides an income tax credit to an eligible company for creating new jobs after the company has signed a financial incentive agreement with ADED. The annual payroll of the new employees must meet the payroll threshold for the tier in which the business is located. The income tax credit is a percentage of the annual payroll of the new full-time permanent employees and is earned each tax period for a period of five years. Unused credits may be carried forward for nine years beyond the year in which the credit was first earned.
You may download the current Tier Map from ADED’s web site. Go to the ADED website and click on “Tier Map”.
Return to the top of the page
TAX BACK
The Tax Back program provides sales and use tax refunds on the purchase of building materials and machinery and equipment to qualifying businesses that create new jobs as a result of construction, expansion, or facility modernization projects in Arkansas.
To qualify for the Tax Back program, a business must obtain an endorsement resolution from the local governing authority and be approved by the Arkansas Department of Economic Development.
The Tax Back program cannot be used by itself. Within two years of signing the Tax Back agreement, the business must sign a job creation agreement under the Advantage Arkansas program or the Create Rebate program.
Return to the top of the page
CREATE REBATE
The Create Rebate program requires a minimum payroll of $2,000,000 within 24 months for the new full-time permanent employees hired after the date of the financial incentive agreement.
Under terms negotiated by ADED, this program provides businesses a financial incentive equal to 3.9 to 5 percent of the annual payroll of the new full-time permanent employees. The financial incentive percentage depends on the tier in which the business is located.
Return to the top of the page
ARKPLUS
The ArkPlus Program is negotiated by ADED in highly competitive situations. The ArkPlus program requires a minimum investment and minimum payroll based on the payroll of new full-time permanent employees hired after the date of a financial incentive agreement signed with ADED. The minimum investment and the minimum payroll requirements are dependent on the tier in which the business is located and vary from a $2 million investment and $1 million payroll in Tier 4 to a $5 million investment and a $2 million payroll in Tier 1.
Return to the top of the page
TARGETED BUSINESS INCENTIVES
Businesses that qualify as “targeted businesses” may qualify for three special incentives designed to help new, knowledge-based businesses in their early years.
Companies that are doing business in a targeted business sector and pay wages that are 150% to 180% of the state or county average wage and that meet the requisite payroll thresholds may qualify for:
• The Targeted Tax Back program, which provides a refund of sales, and use taxes paid on the purchase of building materials and machinery and equipment associated with the approved project.
• A 10% tax credit based on payroll
• A 33% tax credit on eligible research expenditures
• The Department of Economic Development may sell the income tax credits earned under this program upon approval.
Return to the top of the page
RESEARCH & DEVELOPMENT INCENTIVES
The different research and development tax credits are intended to provide incentives for university-based research, in-house research of several kinds, and research and development in start-up, technology-based enterprises. It is important for the applicant to understand the different incentives and to select the most appropriate for the eligible research and development activity. In summary:
1. The incentive for research and development with universities is intended for firms of virtually every size and stage of development, may compliment in-house research and may be combined with in-house research incentives.
2. The incentives for in-house research are intended for: (a) the on-going in-house research programs of existing eligible businesses; (b) eligible “targeted” businesses which have been in operation for less than five years that are engaged in in-house research; and (c) eligible businesses engaged in strategic research and development.
3. The incentive for research and development under programs of the Arkansas Science and Technology Authority is intended for companies in the earliest states of development and for knowledge-based companies that require a continuing research and development program to remain competitive.
Return to the top of the page
TOURISM DEVELOPMENT
The Arkansas Tourism Development Act provides state sales tax credits and income tax credits to businesses operating or intending to operate an approved tourism attraction project.
Sales tax credits shall be determined in accordance with the following criteria:
1. Eligible minimum project costs must be $500,000;
2. The percentage of sales tax credits shall be determined by total approved project costs:
• Projects with expenditures of $500,000 but less than $1 million are eligible for a 10% of the eligible project expenditures;
• Projects with expenditures of more than $1 million are eligible for a credit of 25% of the eligible project expenditures;
3. The sales tax credit may only be applied against the increased sales tax liability of the approved project; and
4. Other review criteria requested by ADED may be needed to determine whether the tourism attraction project meets the intent of the act.
5. Additionally, eligible businesses may receive an income tax credit equal to 100 times the average hourly wage of each new full-time permanent employee, with a $3,000 cap per employee. The multiplier increases from 100 to 400 with a $6,000 cap per employee in a “high unemployment county”. New full-time permanent employees must be Arkansas taxpayers.
Return to the top of the page
OTHER PROGRAMS OF INTEREST
Existing Workforce Training Program – provides financial assistance to Arkansas companies for upgrading the skills of their existing workforce. Secondary objectives are to build the capacity within state-supported educational institutions to supply the on-going training needs of Arkansas business and industry.
For more information on this program, please contact: Gay Johnson, ADED-Training, 1 Capitol Mall, Little Rock, Ar 72201, phone 501.682.7323
Small Business Loan Program - The Small Business Loan Program was created to stimulate small businesses by providing up to one-half of the amount of participation loans offered by approved community lenders.
A small business is one with fewer than 50 full-time employees and less than $1 million in annual gross sales, excluding agricultural production.
The project must provide reasonable expectations for job creation. ADED’s share cannot exceed 50% of the total loan amount and cannot be less than $2,500 or more than $40,000.
Public Roads Improvement Credit - The Arkansas Public Roads Improvement Credit Act of 1999 provides an income tax credit to any individual , fiduciary or corporation subject to Arkansas state income tax that contributes to the Public Road Incentive Fund of the Department of Economic Development. The contribution may be made to a general improvement fund or designated for a specific project that is approved by the Director.
The credit cannot exceed 33 percent of the taxpayer’s contribution. In any one-tax year, the credit cannot exceed 50 percent of the taxpayer’s net Arkansas state income tax liability after all other credits and reductions have been calculated. Any amount over 50 percent can be carried forward up to three years.
Freeport Law – Arkansas has a Freeport Law that exempts from property tax those finished goods and raw materials in transit or awaiting shipment to out-of-state customers.
Customized Training Incentives – The Customized Training Incentive Program provides pre-employment training for Arkansas workers to meet the skills needed in the state’s new and expanding businesses. When eligible companies locate or expand operations in Arkansas, the Customized Training Incentives team works with the Community and Business Development team to negotiate with the business. After a commitment to the state is made, a specific Customized Training Incentives coordinator is assigned to develop the training plan with the business.
For full details on all incentives offered by the Arkansas Department of Economic Development you may visit their web site at www.1800arkansas.com.
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