WeVote
Log In

Bill

WeVote Research Nonpartisan
Bill Summary · HB 1216

Summary of House Bill 1216: Free Market Zones Act

Purpose and Intent

House Bill 1216, titled the Free Market Zones Act, aimed to create tax incentives for businesses located in designated opportunity zones in Arkansas. The bill sought to exempt these businesses from several state taxes, including the income tax, corporate franchise tax, and elective pass-through entity tax, thereby encouraging economic development in low-income areas.

Key Provisions

  • Tax Exemptions:
    • Businesses located in an opportunity zone would be exempt from:
    • Income Tax
    • Corporate Franchise Tax
    • Elective Pass-Through Entity Tax
  • Repeal of Existing Law: The bill proposed to repeal existing Arkansas law (§ 26-51-460), which adopted federal provisions related to opportunity zones as of January 1, 2018.
  • Effective Date: The tax exemptions would apply to tax years beginning on or after January 1, 2025.
  • Eligibility Criteria:
    • To qualify for the tax exemptions, businesses must locate in an opportunity zone on or after the effective date of the act.
    • The bill included a definition of "opportunity zone" based on federal guidelines.

Fiscal Impact

  • The fiscal impact of the bill was significant, with estimates suggesting a general revenue reduction of $583 million for FY2026 if 53% of eligible businesses located in opportunity zones took advantage of the exemptions.
  • The fiscal impact was calculated based on the total tax liabilities of businesses in Arkansas, with a focus on those in opportunity zones.

Affected Parties

  • Businesses: The primary beneficiaries would be businesses that establish operations in designated opportunity zones after the bill's effective date.
  • State Revenue: The state would experience a substantial reduction in tax revenue due to the exemptions provided under the bill.

Procedural Aspects

  • Legislative Journey:
    • Introduced on January 23, 2025, the bill was read and referred to the House Committee on Revenue & Taxation.
    • An amendment (Amendment No. 1) was adopted on March 10, 2025, clarifying eligibility requirements.
    • The bill ultimately died in committee at sine die adjournment on May 5, 2025.

Conclusion

While HB 1216 aimed to stimulate economic growth in Arkansas's opportunity zones through significant tax incentives, it did not progress past the committee stage. The proposed changes would have had a considerable impact on both businesses and state revenue had the bill been enacted.

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

Sign in to ask a question.