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HB 1910

TO ALLOW A DEDUCTION FOR CERTAIN QUALIFIED BUSINESS EXPENSES UNDER THE INCOME TAX ACT OF 1929.

2025 Regular Session Introduced by Robin Lundstrum

HB 1910 allows Arkansas taxpayers with pass-through businesses to deduct 20% of qualified business income, potentially reducing state taxes by $108 million in 2026.

Died in House Committee at Sine Die adjournment.
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Bill Summary · HB 1910

Summary of House Bill 1910 (HB 1910)

Purpose and Intent

House Bill 1910 (HB 1910) was introduced to allow a deduction for certain qualified business expenses under the Income Tax Act of 1929 in Arkansas. The bill aimed to align state tax law with federal provisions regarding Qualified Business Income (QBI) deductions, specifically those outlined in 26 U.S.C. § 199A.

Key Provisions

  • Adoption of Federal Law: HB 1910 proposed to adopt the provisions of 26 U.S.C. § 199A(a)-(h) as they were effective on January 1, 2025. This federal law provides a 20% deduction for qualified business income from pass-through entities (such as sole proprietorships, partnerships, and S corporations).

  • Exclusions from QBI: The bill specified that certain types of income would be excluded from QBI calculations, including:

    • Wage income
    • Reasonable compensation to S corporation shareholders for services
    • Guaranteed payments to partners for services
    • Investment income unrelated to a trade or business

  • No Expiration Clause: Unlike the federal provisions, which are set to expire on December 31, 2025, HB 1910 did not include a similar expiration date, allowing the deduction to continue in Arkansas even if the federal deduction lapses.

  • Effective Date: The provisions of the bill were set to take effect for tax years beginning on or after January 1, 2025.

Fiscal Impact

  • Revenue Reduction: The implementation of HB 1910 was projected to reduce general revenue by approximately $108 million for the fiscal year 2026.

  • Implementation Costs: The Arkansas Integrated Revenue System (AIRS) would require an estimated $16,000 for programming updates, with no annual maintenance costs anticipated.

Affected Parties

  • Taxpayers: The bill would have benefited taxpayers who own pass-through businesses by allowing them to claim a deduction for qualified business expenses, thereby potentially lowering their state income tax liability.

  • Tax Administration: The Arkansas Department of Finance and Administration would need to educate its employees and the tax community about the new provisions and update tax forms and instructions accordingly.

Legislative Actions

  • Introduced: March 31, 2025
  • Committee Review: The bill was read for the first time, rules were suspended, and it was referred to the Committee on Revenue & Taxation on April 1, 2025.
  • Status: HB 1910 died in the House Committee at Sine Die adjournment on May 5, 2025.

Conclusion

While HB 1910 aimed to provide significant tax relief to owners of pass-through businesses in Arkansas by adopting federal QBI deductions, it ultimately did not progress through the legislative process. The potential fiscal impact and benefits for taxpayers were notable, but the bill's failure to advance means these provisions will not be enacted.

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

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