Manufacturers and industrial processors with facilities located in Arkansas may be eligible for a utility tax exemption. Arkansas offers an exemption from the full state sales tax rate on the purchase of electricity, natural gas, and water used in qualifying production activities. This tax exemption is authorized by Act 1411 of 2014.

Exemption Language of Act 1411 of 2014

"Sales of natural gas and electricity to a manufacturer for use directly in the manufacturing process will be taxed" at a sales tax rate of 0.625%.

Utility Study Requirement for Exemption Qualification

An Arkansas utility tax study must list every piece of equipment and appliance (production and non-production) that uses the utility and the annual consumption of each. Failure to properly calculate or classify utility usage is cause for denial of the exemption.

Arkansas Statute of Limitations on Tax Refund

3 years

State Sales Tax Rate: 6.5%

Average Local Sales Tax Rate: 2.97%

Helpful Resources

Arkansas Utility Exemption Certificate: Form ET-186 A

Arkansas Utility Exemption Statute/Rule: Act 1411 of 2014

Arkansas Claim Form for Tax Refund: Application for Refund