Arkansas Enacts Exemption for Sales to Qualified Nonprofit Organizations

Arkansas has enacted a sales and use tax exemption for sales to qualified nonprofit organizations. In order to qualify, the nonprofit organization must:

• Have an annual operating budget of less than $200,000, and
• Perform charitable community-based services in the state to benefit residents of the state that are in need of assistance.

The exemption will apply to sales of tangible personal property, specified digital products, a digital code, and services to qualified nonprofit organizations. Sales of the following specified items to qualified nonprofit organizations will not qualify for the exemption and will remain taxable:

• A motor vehicle
• A motorboat
• An aircraft or airplane
• An alcoholic beverage
• Tobacco
• A computer
• A material used to construct a residential or commercial structure
• A household appliance
• A mobile telephone or cellular telephone
• An all-terrain vehicle
• A television

The exemption will become effective ninety days after adjournment of the 2025 Legislature and will become applicable on the first day of the calendar quarter following the effective date.

A nonprofit organization requesting an exemption certificate must file an application with the Secretary of the Department of Finance and Administration. (Act 1007 (H.B. 1671), Laws 2025)