Bill
HB 1935
Arkansas HB 1935 creates a modernization and automation tax credit for large projects ($25M+), tied to cost‑benefit certification, with limits and eligibility under AEDC rules.
Note on documents and scope
- The bill metadata you provided lists a local/private bill about Coahoma County ARPA funds for Clarksdale Coahoma County Ministries (Care Station).
- However, all legislative text and fiscal documents provided relate to an Arkansas statewide bill (95th GA, 2025) titled to amend the Consolidated Incentive Act of 2003 and create a “modernization and automation” tax credit. This summary describes the substantive bill text and fiscal analyses included in the documents. Please confirm if you intended the Coahoma County/local bill or the Arkansas statewide HB 1935.
Purpose and intent
- Create a modernization and automation tax credit under the Consolidated Incentive Act of 2003 to encourage existing in‑state businesses to invest in modernization, automation, expansion, or retention projects.
Key provisions (as drafted and as amended by House Amendment H1)
- Eligibility and procedural requirements
- Applicant must submit an application and enter a financial incentive agreement with the Arkansas Economic Development Commission (AEDC) before incurring project costs (preconstruction costs excepted).
- Projects must be completed within six years of the agreement.
- Businesses must maintain current average payroll and employment during the project and for 24 months after completion.
- Agreements must contain forfeiture provisions requiring repayment of credits if the agreement is breached.
- Minimum investment
- Original bill: minimum project costs of $5,000,000.
- Amendment H1: raised minimum to $25,000,000.
- Lease payments for buildings/equipment (first five years) may count toward the investment threshold.
- Business qualifications
- Must have been in continuous operation in Arkansas for at least two years.
- Must hold a direct‑pay sales and use tax permit from DFA before applying.
- Amendment H1 also requires AEDC to certify a positive cost‑benefit analysis for the project.
- Credit mechanics
- Original bill: credit up to 5% of eligible project costs; a taxpayer may not use more than $2,000,000 of credit in a fiscal year; unused credits may be carried forward up to five years.
- Some sections of the text reference a credit amount tied to the state sales & use tax rate (0.5% above the rate); the bill text contains both formulations and would need clarification in final drafting.
- Credits may be taken subject to annual limits (e.g., credits in a year cannot exceed 50% of a qualified business’s direct‑pay sales & use tax liability in some provisions).
- Interaction with other incentives
- If a business applies for both this credit and a job‑creation tax credit, the related incentive agreements must be approved within a set window of one or two years of each other (text contains both versions; final language governs).
Fiscal and administrative impact
- DFA fiscal notes present contrasting estimates:
- Initial DFA estimate (pre‑H1): revenue reductions of ~$10 million in FY2026 and ~$40 million annually thereafter (based on historical InvestArk claims and ~450 direct‑pay permit holders).
- DFA estimate for HB1935‑H1 (with $25M threshold and AEDC cost‑benefit requirement): projects deemed revenue neutral because AEDC must certify a positive cost‑benefit and incentive agreements will be used to offset net cost.
- Implementation costs: Arkansas Integrated Revenue System programming estimated at ~$12,000; tax forms/instructions updates; staff training and taxpayer education required.
- The bill as drafted includes a $2,000,000 per‑taxpayer annual cap but no statewide aggregate cap on credits.
Who is affected
- Qualified Arkansas businesses that meet the operational history and direct‑pay permit requirements (notably larger projects under H1 because of the $25M threshold).
- Arkansas Economic Development Commission (project review, cost‑benefit certification) and Department of Finance & Administration (administration, certification, revenue effects).
- State general revenues: potentially material if many credits are certified (historical comparators: InvestArk credits averaged ~$33–35M/year before sunset).
Timing and enactment
- The bill text lists an effective date of October 1, 2025.
- Documents include an engrossed version dated 4/8/25 and DFA fiscal notes dated 4/5–4/8/2025.
Status and discrepancies to verify
- Your top metadata lists status “Died In Committee,” but the provided legislative action history contains conflicting items (reads, committee referrals, amendment adoption, passage entries, and an “Act 882” notification).
- Recommendation: verify the correct HB 1935 by jurisdiction (Arkansas vs. other states) and confirm legislative status with the official legislative records for that jurisdiction before relying on enactment or effective date.
Compiled from official sources — confirm details with the bill’s official record.
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