Summary — HB 1691 (Torres / Sen. Wallace) — Property Tax Exemption for Public Charity Motor Vehicles
Status
- Introduced: December 20, 2024
- Final status (as provided): Died in Committee
- Jurisdiction: Arkansas (95th General Assembly, Regular Session 2025)
- Effective date (as drafted, if enacted): applies to assessment years beginning on or after January 1, 2026
Purpose / Intent
- To expand existing ad valorem (property) tax exemptions for “institutions of purely public charity” to explicitly include certain motor vehicles used for public charity purposes. The bill seeks to give public charities the same flexibility as state/local governments to lease rather than purchase vehicles without incurring personal property tax on those vehicles.
Key provisions (as amended — Amendment H1, engrossed 3/19/2025)
- Amends Arkansas Code § 26-3-301(7) to add motor vehicles (defined by § 26-52-103) to the list of exempt property, where the vehicles:
- Are used exclusively for purposes of public charity; and
- Are subject to a lease of at least twelve (12) months by an institution of public charity.
- Original version exempted motor vehicles leased by a public charity for a minimum of one year regardless of exclusive use; Amendment H1 inserted the requirement that vehicles be “used exclusively for purposes of public charity.”
- Effective for assessment years beginning January 1, 2026 (if enacted).
Fiscal impact
- No anticipated impact to state revenues.
- Potential reduction in property tax revenue for local tax entities (counties, cities, school districts, etc.) to the extent public charities lease qualifying vehicles that would otherwise have been taxed.
- Administrative costs: minor implementation costs (training, policy updates, OMV manual and DFA website updates).
Taxpayer / stakeholder impact
- Public charities: would be relieved from paying personal property tax on qualifying leased vehicles used exclusively for charitable purposes.
- County assessors and local tax offices: will need procedures to process exemption applications and validate exclusive charitable use and lease terms.
- Department of Finance & Administration / Office of Motor Vehicles / Office of Driver Services: will need to update manuals, websites, and provide staff training.
Legal / constitutional considerations
- DFA legal analysis noted potential constitutional questions: Arkansas Const. Art. 16, § 5 expressly exempts “buildings and grounds and materials used exclusively for public charity” but does not explicitly mention motor vehicles. DFA suggested the bill may benefit from additional adjustments (e.g., inserting “purely” before “public charity”) and clearer language on permissible vehicle use to reduce legal risk. Amendment H1 addressed the “exclusively” usage concern but did not resolve the constitutional scope question.
Implementation / procedures
- Requires updates to OMV manual and DFA web content, training for relevant DFA and county staff, and county-level policy updates for exemption processing.
- DFA indicated “adequate time” for implementation if enacted.
Notes
- The provided legislative record contains mixed entries (including unrelated entries from other states’ bills with the same number). This summary focuses on the Arkansas HB 1691 materials (DFA fiscal impact statements, engrossed bill text, and Amendment H1) provided in the documents.
