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Bill

HB 1935

TO CREATE A MODERNIZATION AND AUTOMATION TAX CREDIT TO ENCOURAGE INVESTMENT BY EXISTING BUSINESSES WITHIN THE STATE.

2025 Regular Session Introduced by Les Eaves and 1 co-sponsor

HB 1935 offers Arkansas businesses a tax credit up to 5% on $25M investments in modernization and automation, boosting productivity and job retention.

Notification that HB1935 is now Act 882
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WeVote Research Nonpartisan
Bill Summary · HB 1935

Summary of HB 1935: Modernization and Automation Tax Credit

Purpose and Intent

House Bill 1935 (HB 1935) aims to stimulate investment by existing businesses in Arkansas through the establishment of a Modernization and Automation Tax Credit. This initiative is designed to encourage businesses to modernize their operations and automate processes, thereby enhancing productivity and competitiveness within the state.

Key Provisions

HB 1935 amends the Consolidated Incentive Act of 2003 and introduces several critical provisions:

  • Eligibility Requirements:

    • Businesses must have been in continuous operation in Arkansas for at least two years.
    • A minimum investment of $25,000,000 in project costs is required (increased from the original $5,000,000).
    • Businesses must hold a direct-pay sales and use tax permit from the Department of Finance and Administration (DFA).
    • A positive cost-benefit analysis from the Arkansas Economic Development Commission (AEDC) is necessary before project approval.

  • Credit Details:

    • The tax credit can be up to 5% of eligible project costs.
    • A business may claim a maximum of $2,000,000 in credits per year.
    • Unused credits can be carried forward for up to five years.

  • Project Completion and Compliance:

    • Projects must be completed within six years of executing the financial incentive agreement.
    • Businesses are required to maintain their current average payroll and employment levels during the project and for 24 months following its completion.
    • If a business breaches the agreement, it must return any credits claimed.

Affected Parties

The bill primarily impacts existing businesses in Arkansas that are looking to invest in modernization and automation. It is expected to benefit companies that meet the outlined criteria and are willing to engage with the AEDC for financial incentives.

Fiscal Impact

The fiscal impact of HB 1935 is projected as follows:
- FY2026: Estimated revenue reduction of $10,000,000.
- FY2027 and beyond: Estimated revenue reduction of $40,000,000.

This impact is based on historical claims from similar tax credit programs, indicating a potential increase in tax credits claimed as businesses take advantage of the new incentives.

Implementation Timeline

  • Effective Date: The provisions of HB 1935 will take effect on October 1, 2025.
  • Application Process: Businesses must submit applications and enter into financial incentive agreements before incurring project costs (excluding preconstruction costs).

Conclusion

HB 1935 represents a significant legislative effort to bolster the Arkansas economy by incentivizing modernization and automation among existing businesses. By providing substantial tax credits, the state aims to enhance business operations, retain jobs, and attract further investment.

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

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