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HB 1464

TO CREATE A SALES AND USE TAX EXEMPTION FOR PARTS FOR AND REPAIR OF AGRICULTURAL EQUIPMENT AND MACHINERY.

2025 Regular Session Introduced by Fran Cavenaugh and 1 co-sponsor

HB 1464 aimed to exempt sales tax on parts and services for agricultural equipment repairs, easing costs for farmers and boosting the agricultural sector.

Died in House Committee at Sine Die adjournment.
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Bill Summary · HB 1464

Summary of HB 1464: Sales and Use Tax Exemption for Agricultural Equipment

Bill Number: HB 1464
Introduced: February 12, 2025
Status: Died in House Committee at Sine Die adjournment
Sponsors: Representatives Vaught and Cavenaugh

Purpose and Intent

House Bill 1464 aimed to establish a sales and use tax exemption for parts and services related to the repair and maintenance of agricultural equipment and machinery. The intent was to reduce the financial burden on farmers and agricultural businesses by eliminating taxes on essential equipment repairs and modifications.

Key Provisions

The bill proposed the following key provisions:

  1. Tax Exemption Scope:

    • Exemption applies to:
      • Parts purchased to modify, replace, or repair existing agricultural equipment and machinery.
      • Services related to the installation, alteration, addition, cleaning, refinishing, replacement, or repair of agricultural equipment and machinery.

  2. Definitions:

    • Agricultural Equipment and Machinery: Implements used exclusively in farming, including:
      • Irrigation pipes (both above ground and underground).
      • Aviation machinery and equipment.
      • Implements used for harvesting crops.
    • Farming: Defined as the agricultural production of food, fiber, grass sod, or nursery products as a business.

  3. Exclusions:

    • The exemption does not cover:
      • Implements used in timber production and severance.
      • Motor vehicles subject to registration.
      • Hand tools.

  4. Effective Date:

    • The exemption would take effect on the first day of the calendar quarter following the act's effective date.

Fiscal Impact

The fiscal impact of HB 1464 was significant, with estimated reductions in state sales and use tax revenues as follows:

  • FY 2026: Approximately $15,078,925 loss in state revenue.
  • FY 2027: Estimated loss of $23,296,940 in state revenue.

Breakdown of Revenue Loss:

  • General Revenue: 4.5% of total losses.
  • Local City and County Sales and Use Tax Loss: Approximately $7,655,454.

Affected Parties

The primary beneficiaries of this bill would have been farmers and agricultural businesses that rely on agricultural equipment and machinery. By exempting repair parts and services from sales tax, the bill aimed to lower operational costs for these entities.

Procedural Aspects

  • The bill was filed and referred to the House Committee on Revenue & Taxation but ultimately died in committee on May 5, 2025, at Sine Die adjournment.
  • If passed, the Department of Finance and Administration would have needed to update its resources and training materials to reflect the new tax exemption.

Conclusion

While HB 1464 sought to provide financial relief to the agricultural sector by exempting certain repairs and parts from sales tax, it did not advance past the committee stage. The proposed legislation highlighted the ongoing discussions around supporting agriculture through tax policy in Arkansas.

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

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