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Bill

SB 568

TO AMEND THE LAW CONCERNING THE TAXES APPLICABLE TO LITHIUM EXTRACTION AND DEVELOPMENT; TO PROVIDE A SALES AND USE TAX EXEMPTION FOR LITHIUM RESOURCE DEVELOPMENT; AND TO AMEND THE LAW CONCERNING THE SEVERANCE TAX ON LITHIUM.

2025 Regular Session Introduced by Wade Andrews and 7 co-sponsors

SB 568 boosts Arkansas' lithium industry by exempting qualified firms from sales taxes and modifying severance taxes, promoting investment and job creation in renewable energy.

Notification that SB568 is now Act 1012
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WeVote Research Nonpartisan
Bill Summary · SB 568

Summary of Senate Bill 568 (SB 568)

Purpose and Intent

Senate Bill 568 (SB 568) aims to amend existing laws regarding the taxation of lithium extraction and development in Arkansas. The bill introduces a sales and use tax exemption for businesses involved in lithium resource development and modifies the severance tax structure related to lithium production. The intent is to promote investment in lithium-related industries, which are crucial for battery production and renewable energy technologies.

Key Provisions

1. Sales and Use Tax Exemption

  • Qualified Firms: The bill establishes a sales and use tax exemption for qualified firms engaged in developing lithium, cathode, anode, lithium battery, and grid storage facility equipment.
  • Eligible Purchases: The exemption applies to:
    • Equipment and machinery for lithium extraction and processing.
    • Services related to the development and operation of qualified facilities.
    • Electricity used by qualified facilities.
    • Materials for further processing of lithium-related products.
  • Investment Requirement: To qualify, firms must:
    • Invest at least $100 million in the state within ten years of starting construction.
    • Pay a total compensation of at least $3 million to employees within two years of operation.
    • Obtain a positive cost-benefit analysis from the Arkansas Economic Development Commission (AEDC).

2. Severance Tax Modifications

  • Severance Tax Structure: The bill clarifies the distribution of severance tax revenues from brine extraction, specifically for lithium production.
  • Exemption for New Brine Units: New brine units coming into service after July 1, 2023, will be exempt from severance tax from July 1, 2028, to June 30, 2033, provided they meet reporting requirements.

3. Definition of Solid Waste

  • The bill expands the definition of "solid waste" to include electronic waste, lithium-ion battery cells, and battery packs, allowing for a 30% income tax credit for recycling equipment used to manage these materials.

Affected Parties

  • Qualified Firms: Businesses involved in lithium extraction and development will benefit from tax exemptions and incentives.
  • State Revenue: The bill is classified as revenue neutral, meaning it is not expected to significantly impact state revenues.
  • Local Governments: Changes in severance tax distribution may affect local funding through the County Aid Fund.

Procedural Aspects

  • Legislative Timeline: SB 568 was introduced on March 27, 2025, and has undergone several amendments before being signed into law as Act 1012 on April 23, 2025.
  • Implementation: The Arkansas Department of Finance and Administration (DFA) will need to make programming changes to its revenue systems, estimated to cost around $22,000.

Conclusion

SB 568 represents a strategic move by Arkansas to enhance its position in the lithium market, encouraging investment and development in this critical sector. By providing tax incentives and clarifying tax structures, the bill aims to stimulate economic growth and job creation in the state while supporting the transition to renewable energy technologies.

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

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