Arkansas Governor Sarah Huckabee Sanders has signed legislation providing a credit against income tax for the cost of making capital improvements to a facility or property related to using water transportation in Arkansas, including, without limitation, the construction, improvement, capital facility rehabilitation, and expansion of a waterway facility and the construction or improvement of rail or road access to a waterway facility, on or after January 1, 2024, and on or before December 31, 2025. (L. 2023, S478, effective for tax years beginning on or after 01/01/2024.)
The tax credit must not exceed $3 million for a taxpayer that makes the capital improvements to a facility or property related to using water transportation in Arkansas.
The amount of the tax credit that a taxpayer may claim each year is limited to a maximum of 10% of the total tax credit for which the taxpayer is eligible. The total cumulative amount of tax credits for all taxpayers in a tax year must not exceed $2.5 million and will be issued on a first-come, first-serviced basis.
A tax credit will be issued only after the Secretary of the Department of Commerce has determined, based on the information provided by the applicant for a tax credit that the taxpayer’s capital investment in a facility or property related to using water transportation in Arkansas will provide an economic benefit to the state that likely will be equal to or greater than the amount of the tax credit allowed.
Any unused income tax credit that cannot be claimed in a tax year may be carried forward for nine consecutive tax years following the tax year in which the income tax credit was earned.
A taxpayer is not eligible for the credit if the taxpayer has received funds under the Arkansas Port, Intermodal, and Waterway Development Grant Program.
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