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HB 1702

City of Clarksdale; authorize levying of special sales tax on certain businesses to support public safety and economic growth.

2025 Regular Session Introduced by Orlando Paden

Expands Arkansas sales tax exemptions to cover machinery used in closed-loop mechanical recycling, enabling reclaim and reuse of post-use materials in the manufacturing process.

Died In Committee
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Bill Summary · HB 1702

Summary — HB 1702 (95th Ark. Gen. Assembly, 2025) — Sales/Use Tax Exemption for Closed‑Loop Recycling Machinery

Note on source materials: the file provided contains mixed metadata (including an unrelated local tax title and references to bills from other states). This summary focuses only on the bill text and DFA fiscal statements that amend Arkansas sales/use tax law to add an exemption for machinery used in closed‑loop mechanical recycling.

Main purpose

To expand existing Arkansas sales and use tax exemptions for manufacturing machinery and equipment to also cover machinery and equipment used to mechanically recycle post‑use materials in a closed‑loop circular manufacturing process.

Key provisions

  • Amends Arkansas Code § 26‑52‑402(c)(2)(B) (sales tax exemption) and § 26‑53‑114(c)(3)(B) (use tax exemption) to add a new subdivision exempting machinery and equipment that are:
    • Used to identify, gather, transport, and store post‑use materials;
    • Used to convert post‑use materials into raw materials, work‑in‑process, or finished products; and
    • Used to convey converted post‑use materials directly to the point where they are reintroduced into the taxpayer’s manufacturing process.
  • Defines key terms:
    • “Closed‑loop circular process”: reclaimed post‑use materials are converted and reintroduced into the original manufacturing process and become a recognized component of the finished product.
    • “Mechanically recycle”: physical processes (e.g., washing, drying, grinding, regranulating, compounding).
    • “Post‑use material”: material generated and reclaimed directly from the taxpayer’s manufacturing process, managed as an item of value, intended for mechanical recycling back into the process, not post‑consumer waste, and not commingled with solid or hazardous waste onsite or during processing.
  • Effective date: the first day of the calendar quarter following the act’s effective date.

Who is affected

  • Primary beneficiaries: Arkansas manufacturers that generate and reclaim post‑use materials as described and that use or purchase qualifying machinery/equipment for closed‑loop mechanical recycling.
  • State and local governments: potential reduction in sales and use tax receipts for purchases of qualifying equipment; fiscal impact unspecified.

Fiscal and administrative notes

  • Arkansas Department of Finance & Administration (DFA) reported it cannot determine the fiscal impact because the number/value of eligible manufacturers is unknown.
  • DFA indicated no special resources required but that websites and training materials would need updating.
  • Status: Introduced December 20, 2024; reported as “Died In Committee” (did not advance).

Compiled from official sources — confirm details with the bill’s official record.

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