Stricken language would be deleted from and underlined language would be added to present law.
*CEB021* 01/29/2025 1:44:30 PM CEB021
State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1303 3
4
By: Representatives Jean, Achor, F. Allen, Andrews, Barker, Beaty Jr., Beck, Bentley, S. Berry, Breaux, 5
K. Brown, M. Brown, Joey Carr, Cavenaugh, Childress, Cozart, Dalby, Eaves, Eubanks, Evans, K. 6
Ferguson, Gonzales, Henley, Holcomb, Hollowell, L. Johnson, Lynch, Maddox, Magie, M. McElroy, 7
McNair, Milligan, J. Moore, K. Moore, Painter, Pearce, Perry, Puryear, J. Richardson, Richmond, Rye, 8
Schulz, M. Shepherd, Springer, Steimel, Tosh, Unger, Vaught, Walker, Wardlaw, Warren, D. Whitaker, 9
Wooldridge, Wooten 10
By: Senators Stone, J. Boyd, Crowell, B. Davis, Dees, Flippo, Gilmore, K. Hammer, Hester, M. McKee 11
12
For An Act To Be Entitled 13
AN ACT TO CREATE TAX INCENTIVES RELATED TO 14
SUSTAINABLE AVIATION FUEL; TO CREATE THE SUSTAINABLE 15
AVIATION FUEL INCENTIVE ACT; TO CREATE INCOME TAX 16
CREDITS RELATED TO SUSTAINABLE AVIATION FUEL; TO 17
CREATE A SALES AND USE TAX EXEMPTION ON UTILITIES 18
USED TO PRODUCE SUSTAINABLE AVIATION FUEL; AND FOR 19
OTHER PURPOSES. 20
21
22
Subtitle 23
TO CREATE THE SUSTAINABLE AVIATION FUEL 24
INCENTIVE ACT; TO CREATE INCOME TAX 25
CREDITS RELATED TO SUSTAINABLE AVIATION 26
FUEL; AND TO CREATE A SALES AND USE TAX 27
EXEMPTION ON UTILITIES USED TO PRODUCE 28
SUSTAINABLE AVIATION FUEL. 29
30
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 31
32
SECTION 1. Arkansas Code Title 26, Chapter 51, is amended to add an 33
additional subchapter to read as follows: 34
Subchapter 29 — Sustainable Aviation Fuel Incentive Act 35
36 HB1303
2 01/29/2025 1:44:30 PM CEB021
26-51-2901. Title. 1
This subchapter shall be known and may be cited as the "Sustainable 2
Aviation Fuel Incentive Act". 3
4
26-51-2902. Definitions. 5
As used in this subchapter: 6
(1) "End user" means an entity that purchases sustainable 7
aviation fuel for that entity's own use; 8
(2) "Incentive agreement" means an agreement entered into by a 9
business and the Arkansas Economic Development Commission to provide the 10
business an incentive to locate a new qualified sustainable aviation fuel 11
project in the state; 12
(3)(A) “New full-time permanent employee” means a position or 13
job that: 14
(i) Is created pursuant to an executed incentive 15
agreement; 16
(ii) Is filled by one (1) or more employees or 17
contractual employees who: 18
(a) Were Arkansas taxpayers during the year in 19
which the tax credits or incentives were earned; 20
(b)(1) Work at or fill a position dedicated to 21
the facility identified in the incentive agreement. 22
(2) A new employee of the business that 23
enters into the incentive agreement under this subchapter who does not work 24
at the facility may be counted if the new employee: 25
(A) Otherwise meets the definition 26
of a new full-time permanent employee; 27
(B) Is subject to the Arkansas 28
Income Tax Withholding Act of 1965, § 26 -51-901 et seq.; 29
(C) Meets an average hourly wage 30
threshold equal to or greater than the state average hourly wage for the 31
preceding calendar year; and 32
(D) Is verified by reports and 33
methods established as required by the incentive agreement; and 34
(c)(1) Are not employees hired by a business 35
before the date the incentive agreement was executed unless: 36 HB1303
3 01/29/2025 1:44:30 PM CEB021
(A) The position or job filled by 1
the existing employee was created in accordance with the incentive agreement; 2
and 3
(B) The position vacated by the 4
existing employee was either filled by a subsequent employee or no subsequent 5
employee will be hired because the business no longer conducts the particular 6
business activity requiring that classification. 7
(2) If the Director of the Arkansas 8
Economic Development Commission and the Secretary of the Department of 9
Finance and Administration find that a significant impairment of Arkansas job 10
opportunities for existing employees will otherwise occur, they may jointly 11
authorize the counting of existing employees as new full -time permanent 12
employees; and 13
(iii) Has been filled for at least twenty -six (26) 14
consecutive weeks with an average of at least thirty (30) hours worked per 15
week. 16
(B) “New full-time permanent employee” includes a 17
contractual employee who works at the facility identified in the incentive 18
agreement only if the contractual employee is offered a benefits package 19
comparable to a direct employee of the business seeking incentives under this 20
subchapter; 21
(4) "Producer" means a business located in the state that 22
manufactures sustainable aviation fuel; 23
(5) "Qualified sustainable aviation fuel project" means a 24
facility that: 25
(A) Manufactures sustainable aviation fuel; 26
(B) Has an installed facility cost of more than two 27
billion dollars ($2,000,000,000); 28
(C) Will employ seventy -five (75) or more new full -time 29
permanent employees; and 30
(D) Begins construction on or before December 31, 2026; 31
and 32
(6) "Sustainable aviation fuel" means naptha -type jet fuel 33
derived from wood biomass. 34
35
26-51-2903. Sustainable aviation fuel end user credit. 36 HB1303
4 01/29/2025 1:44:30 PM CEB021
(a) There is allowed an income tax credit against the income tax 1
imposed by this chapter in an amount equal to one dollar and nine cents 2
($1.09) per gallon over one hundred thousand (100,000) gallons of sustainable 3
aviation fuel purchased by an end user in the tax year. 4
(b) The amount of the income tax credit under this section that may be 5
claimed by a taxpayer in a tax year shall not exceed fifty percent (50%) of 6
the amount of the taxpayer's income tax liability for that tax year. 7
(c) A taxpayer who claims an income tax credit under this section 8
shall not claim any other state income tax credit or deduction for the 9
purchase of sustainable aviation fuel. 10
11
26-51-2904. Sustainable aviation fuel producer credit. 12
(a)(1) There is allowed an income tax credit against the income tax 13
imposed by this chapter in an amount equal to thirty percent (30%) of the 14
cost of sustainable aviation fuel production equipment purchased or 15
facilities constructed for use in the state by a producer that h as been 16
certified as owning a qualified sustainable aviation fuel project. 17
(2) The income tax credit allowed under this section shall not 18
exceed the lesser of ten million dollars ($10,000,000) or the amount of 19
income tax due by a taxpayer. 20
(b) Any unused income tax credit under this section that cannot be 21
claimed in a tax year may be carried forward indefinitely. 22
(c)(1) The income tax credit allowed under this section may be 23
transferred, sold, or assigned. 24
(2) The transfer, sale, or assignment of an income tax credit 25
under this subsection shall be confirmed in writing by the Department of 26
Finance and Administration. 27
(d) An income tax credit under this section shall not be authorized 28
without: 29
(1) A cost-benefit analysis, including without limitation an 30
analysis of other incentives offered by the State of Arkansas with respect to 31
the qualified sustainable aviation fuel project subject to the income tax 32
credit, as certified by the Director of the Arkansas Economic Development 33
Commission in consultation with the Chief Fiscal Officer of the State; and 34
(2) An incentive agreement with performance criteria and 35
clawback provisions as required under subsection (e) of this section. 36 HB1303
5 01/29/2025 1:44:30 PM CEB021
(e) The issuance, sale, and transfer of an income tax credit 1
authorized under this section is subject to an incentive agreement with 2
performance criteria and clawback provisions between a taxpayer and the 3
commission that: 4
(1)(A) Is subject to the approval of the Chief Fiscal Officer of 5
the State to ensure that the cost -benefit analysis required under subsection 6
(d) of this section is met and maintained for a test period that is the 7
longer of the life of the income tax credits or twelve (12) years, subject to 8
the limitation stated in subdivision (e)(1)(B) of this section. 9
(B) The test period described in subdivision (e)(1)(A) of 10
this section shall not be longer than fifteen (15) years; and 11
(2) Includes without limitation the: 12
(A) Capital investment for the qualified sustainable 13
aviation fuel project; 14
(B) New full-time permanent employee positions created by 15
the qualified sustainable aviation fuel project; 16
(C) Annual salary requirements for the new full -time 17
permanent employee positions created by the qualified sustainable aviation 18
fuel project; 19
(D) Timeline for fulfilling the investment and job 20
creation targets stated in the performance and clawback agreement for the 21
qualified sustainable aviation fuel project; and 22
(E) Conditions for the clawback provisions, which are 23
triggered if, during the test period stated in subdivision (e)(1) of this 24
section, the taxpayer: 25
(i) Does not meet the required targets of the 26
qualified sustainable aviation fuel project related to capital investment, 27
job creation, timeline, or annual salary amounts; or 28
(ii) Fails to maintain a positive cost -benefit 29
analysis. 30
31
26-51-2905. Rules. 32
The Secretary of the Department of Finance and Administration may 33
promulgate rules to implement and administer the provisions of this 34
subchapter. 35
36 HB1303
6 01/29/2025 1:44:30 PM CEB021
SECTION 2. Arkansas Code Title 26, Chapter 52, Subchapter 4, is 1
amended to add an additional section to read as follows: 2
26-52-457. Utility services for sustainable aviation fuel project 3
facilities — Definitions. 4
(a) As used in this section: 5
(1) "Producer" means a business located in the state that 6
manufactures sustainable aviation fuel; 7
(2) "Sustainable aviation fuel" means naphtha -type jet fuel 8
derived from wood biomass; and 9
(3) "Utility services" means electricity, liquefied petroleum 10
gas, or natural gas. 11
(b)(1) The gross receipts or gross proceeds derived from the sale of 12
utility services used by a producer of sustainable aviation fuel are exempt 13
from the gross receipts tax levied by this chapter, and the compensating use 14
tax levied by the Arkansas Compensating Tax Act of 1949, § 26 -53-101 et seq. 15
(2) Utility services sold for a purpose other than the purposes 16
stated in subdivision (b)(1) of this section is subject to the full gross 17
receipts tax levied by this chapter, and the full compensating use tax levied 18
by the Arkansas Compensating Tax Act of 1949, § 26 -53-101 et seq. 19
(c)(1) Utility services subject to the exemption provided under this 20
section shall be separately metered from utility services used for any other 21
purpose by a taxpayer. 22
(2) Rules promulgated under subsection (e) of this section may 23
establish additional or alternative requirements for the metering of 24
utilities under this section. 25
(d) Before allowing the exemption of utility services under this 26
section, the Secretary of the Department of Finance and Administration may 27
require a seller of utility services to obtain a certificate from a taxpayer 28
certifying that the taxpayer is eligible for the exemption. 29
(e) The secretary shall promulgate rules for the proper administration 30
of this section. 31
32
SECTION 3. EFFECTIVE DATES. 33
(a) Section 1 of this act is effective for tax years beginning on or 34
after January 1, 2025. 35
(b) Section 2 of this act is effective on the first day of the 36 HB1303
7 01/29/2025 1:44:30 PM CEB021
calendar quarter following the effective date of this act. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36