Stricken language would be deleted from and underlined language would be added to present law.
Act 546 of the Regular Session
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State of Arkansas As Engrossed: H3/12/25 H3/17/25 S4/1/25 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1303 3
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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
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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 AN INCOME TAX 16
CREDIT RELATED TO SUSTAINABLE AVIATION FUEL; AND FOR 17
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Subtitle 20
TO CREATE THE SUSTAINABLE AVIATION FUEL 21
INCENTIVE ACT; AND TO CREATE AN INCOME 22
TAX CREDIT RELATED TO SUSTAINABLE 23
AVIATION FUEL. 24
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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 26
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SECTION 1. Arkansas Code Title 26, Chapter 51, is amended to add an 28
additional subchapter to read as follows: 29
Subchapter 29 — Sustainable Aviation Fuel Incentive Act 30
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26-51-2901. Title. 32
This subchapter shall be known and may be cited as the "Sustainable 33
Aviation Fuel Incentive Act". 34
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26-51-2902. Definitions. 36 As Engrossed: H3/12/25 H3/17/25 S4/1/25 HB1303
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As used in this subchapter: 1
(1) "Incentive agreement" means an agreement entered into by a 2
business and the Arkansas Economic Development Commission to provide the 3
business an incentive to locate a new qualified sustainable aviation fuel 4
project in the state; 5
(2)(A) “New full-time permanent employee” means a position or 6
job that: 7
(i) Is created pursuant to an executed incentive 8
agreement; 9
(ii) Is filled by one (1) or more employees or 10
contractual employees who: 11
(a) Were Arkansas taxpayers during the year in 12
which the tax credits or incentives were earned; 13
(b)(1) Work at or fill a position dedicated to 14
the qualified sustainable aviation fuel project identified in the incentive 15
agreement. 16
(2) A new employee of the business that 17
enters into the incentive agreement under this subchapter who does not work 18
at the qualified sustainable aviation fuel project may be counted if the new 19
employee: 20
(A) Otherwise meets the definition 21
of a new full-time permanent employee; 22
(B) Is subject to the Arkansas 23
Income Tax Withholding Act of 1965, § 26 -51-901 et seq.; 24
(C) Is paid an average annual 25
salary of at least one hundred thousand dollars ($100,000); and 26
(D) Is verified by reports and methods established 27
as required by the incentive agreement; and 28
(c)(1) Are not employees hired by a qualified 29
manufacturer of sustainable aviation fuel before the date the incentive 30
agreement was executed unless: 31
(A) The position or job filled by 32
the existing employee was created in accordance with the incentive agreement; 33
and 34
(B) The position vacated by the 35
existing employee was either filled by a subsequent employee or no subsequent 36 As Engrossed: H3/12/25 H3/17/25 S4/1/25 HB1303
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employee will be hired because the qualified manufacturer of sustainable 1
aviation fuel no longer conducts the particular business activity requiring 2
that classification. 3
(2) If the Director of the Arkansas Economic Development 4
Commission and the Secretary of the Department of Finance and Administration 5
find that a significant impairment of Arkansas job opportunities for existing 6
employees will otherwise occur, they may jointly authorize the counting of 7
existing employees as new full -time permanent employees; and 8
(iii) Has been filled for at least twenty -six (26) 9
consecutive weeks with an average of at least thirty (30) hours worked per 10
week. 11
(B) “New full-time permanent employee” includes a 12
contractual employee who works at the qualified sustainable aviation fuel 13
project identified in the incentive agreement only if the contractual 14
employee is offered a benefits package comparable to a direct employee of the 15
qualified manufacturer of sustainable aviation fuel seeking incentives under 16
this subchapter; 17
(3) "Qualified manufacturer of sustainable aviation fuel" means 18
a taxpayer who: 19
(A) Is a natural person, a company, or a corporation that 20
is engaged in the manufacture, refinement, or processing of sustainable 21
aviation fuel in this state; 22
(B) Uses more than eighty percent (80%) of the electricity 23
and natural gas consumed in the manufacture, refinement, or processing of 24
sustainable aviation fuel to provide power for reactors, distillation 25
columns, heaters, pumps, compressors, coolers, and other sustainable aviation 26
fuel production and processing equipment; and 27
(C) Has an incentive agreement; 28
(4) "Qualified sustainable aviation fuel project" means a 29
facility located in the state that: 30
(A) Manufactures sustainable aviation fuel; 31
(B) Has an installed facility cost of more than two 32
billion dollars ($2,000,000,000), as verified by the commission; 33
(C) Will employ seventy -five (75) or more new full -time 34
permanent employees; and 35
(D) Begins construction on or before December 31, 2027; 36 As Engrossed: H3/12/25 H3/17/25 S4/1/25 HB1303
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(5) "Sustainable aviation fuel" means kerosene -type jet fuel 1
derived from wood biomass; and 2
(6)(A) "Sustainable aviation fuel production and processing 3
equipment" means machinery and equipment that are essential for the 4
receiving, storing, processing, and testing of raw materials used in 5
producing or processing sustainable aviation fuel or the production, storage, 6
testing, and shipping of a finished product of a qualified sustainable 7
aviation fuel project, or both. 8
(B) "Sustainable aviation fuel production and processing 9
equipment" does not include a motor vehicle. 10
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26-51-2903. Qualified manufacturer of sustainable aviation fuel 12
credit. 13
(a)(1) There is allowed an income tax credit against the income tax 14
imposed by this chapter in an amount equal to thirty percent (30%) of the 15
cost of sustainable aviation fuel production and processing equipment 16
purchased for use in the state by a qualified manufacturer of sustainable 17
aviation fuel that has: 18
(A) Obtained a certification from the Director of the 19
Arkansas Economic Development Commission certifying to the Department of 20
Finance and Administration that the qualified manufacturer of sustainable 21
aviation fuel: 22
(i) Operates a qualified sustainable aviation fuel 23
project or has a qualified sustainable aviation fuel project in production; 24
and 25
(ii) Has invested more than two billion dollars 26
($2,000,000,000) after the effective date of this act in a qualified 27
sustainable aviation fuel project for: 28
(a) Property purchased for use in the 29
construction of one (1) or more buildings or an addition or improvement to a 30
building to be used for producing sustainable aviation fuel; 31
(b) Machinery and equipment located in or used 32
in connection with the qualified sustainable aviation fuel project, excluding 33
motor vehicles that are subject to registration; or 34
(c) Project planning costs or construction 35
labor costs, including without limitation: 36 As Engrossed: H3/12/25 H3/17/25 S4/1/25 HB1303
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(1) On-site direct labor and supervision 1
whether employed by a contractor or the owner of the qualified sustainable 2
aviation fuel project; 3
(2) Architectural fees or engineering 4
fees, or both; 5
(3) Right-of-way purchases; 6
(4) Utility extensions; 7
(5) Site preparation; 8
(6) Parking lots; 9
(7) Disposal or containment systems; 10
(8) Water and sewer treatment systems; 11
(9) Rail spurs; 12
(10) Streets and roads; 13
(11) Purchase of mineral rights; 14
(12) Land; 15
(13) Buildings; 16
(14) Building renovation and demolition; 17
(15) Production, processing, and testing 18
equipment; 19
(16) Freight charges; 20
(17) Material handling equipment; 21
(18) Drainage systems; 22
(19) Water tanks and reservoirs; 23
(20) Storage facilities; 24
(21) Equipment rental; 25
(22) Contractors' cost plus fees; 26
(23) Builders' risk insurance; 27
(24) Original spare parts; 28
(25) Job administrative expenses; 29
(26) Office furnishings and equipment; 30
(27) Rolling stock; 31
(28) Capitalized start -up costs as 32
recognized by generally accepted accounting principles; and 33
(29) Other costs related to the 34
construction of the qualified sustainable aviation fuel project; 35
(B) Obtained a certification from the Secretary of the 36 As Engrossed: H3/12/25 H3/17/25 S4/1/25 HB1303
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Department of Energy and Environment certifying to the Department of Finance 1
and Administration that: 2
(i) The qualified manufacturer of sustainable 3
aviation fuel is engaged in the business of manufacturing, producing, 4
refining, or processing sustainable aviation fuel; and 5
(ii) The machinery and equipment purchased are 6
sustainable aviation fuel production and processing equipment; 7
(C) Received a positive cost -benefit analysis, including 8
without limitation an analysis of other incentives offered by the State of 9
Arkansas with respect to the qualified sustainable aviation fuel project 10
subject to the income tax credit, as certified by the Director of the 11
Arkansas Economic Development Commission in consultation with the Chief 12
Fiscal Officer of the State; and 13
(D) An incentive agreement with performance criteria and 14
claw-back provisions as required under subsection (c) of this section. 15
(2) The income tax credit allowed for a qualified manufacturer 16
of sustainable aviation fuel under this section shall not exceed the lesser 17
of the amount: 18
(A) Certified by the Department of Energy and Environment 19
under subdivision (a)(1)(B) of this section; or 20
(B) Provided in the incentive agreement for the qualified 21
sustainable aviation fuel project. 22
(3) The amount of the income tax credit under this section that 23
may be claimed by the taxpayer in a tax year shall not exceed the amount of 24
income tax due by the taxpayer. 25
(b) Any unused income tax credit under this section that cannot be 26
claimed in a tax year may be carried forward indefinitely. 27
(c) The issuance of an income tax credit allowed under this section is 28
subject to an incentive agreement with performance criteria and claw -back 29
provisions between a taxpayer and the Arkansas Economic Development 30
Commission that: 31
(1)(A) Is subject to the approval of the Chief Fiscal Officer of 32
the State to ensure that the cost -benefit analysis required under subdivision 33
(a)(1)(C) of this section is met and maintained for a test period that is the 34
longer of the life of the income tax credits or twelve (12) years, subject to 35
the limitation stated in subdivision (c)(1)(B) of this section. 36 As Engrossed: H3/12/25 H3/17/25 S4/1/25 HB1303
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(B) The test period described in subdivision (c)(1)(A) of 1
this section shall not be longer than fifteen (15) years; and 2
(2) Includes without limitation the: 3
(A) Capital investment for the qualified sustainable 4
aviation fuel project; 5
(B) New full-time permanent employee positions created by 6
the qualified sustainable aviation fuel project; 7
(C) Annual salary requirements for the new full -time 8
permanent employee positions created by the qualified sustainable aviation 9
fuel project; 10
(D) Timeline for fulfilling the investment and job 11
creation targets stated in the performance criteria and claw -back agreement 12
for the qualified sustainable aviation fuel project; and 13
(E) Conditions for the claw -back provisions, which are 14
triggered if, during the test period stated in subdivision ( c)(1) of this 15
section, the taxpayer: 16
(i) Does not meet the required targets of the 17
qualified sustainable aviation fuel project related to capital investment, 18
job creation, timeline, or annual salary amounts; or 19
(ii) Fails to maintain a positive cost -benefit 20
analysis. 21
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26-51-2904. Rules. 23
The Secretary of the Department of Finance and Administration, the 24
Secretary of the Department of Commerce, and the Secretary of the Department 25
of Energy and Environment may promulgate rules to implement and administer 26
this subchapter. 27
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SECTION 2. EFFECTIVE DATE. Section 1 of this act is effective for tax 29
years beginning on or after January 1, 2025. 30
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/s/Jean 32
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APPROVED: 4/10/25 35
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