Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1538 3
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By: Representative Ray 5
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For An Act To Be Entitled 8
AN ACT TO AMEND THE LAW CONCERNING THE NET OPERATING 9
LOSS INCOME TAX DEDUCTION; TO INCREASE THE CARRY -10
FORWARD PERIOD FOR THE NET OPERATING LOSS INCOME TAX 11
DEDUCTION; AND FOR OTHER PURPOSES. 12
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Subtitle 15
TO AMEND THE LAW CONCERNING THE NET 16
OPERATING LOSS INCOME TAX DEDUCTION; AND 17
TO INCREASE THE CARRY -FORWARD PERIOD FOR 18
THE NET OPERATING LOSS INCOME TAX 19
DEDUCTION. 20
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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 22
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SECTION 1. DO NOT CODIFY. Legislative findings. 24
The General Assembly finds that: 25
(1) The state's income tax laws should be amended to modernize 26
and simplify the tax code, increase Arkansas's competitiveness, create jobs, 27
and ensure fairness to all taxpayers; 28
(2) Net operating loss carry -forward provisions promote tax 29
neutrality by reducing tax burdens on businesses with cyclical income streams 30
or exposure to economic downturns, regardless of size or age; 31
(3) Longer net operating loss carry -forward provisions promote 32
longevity and facilitate future growth in start -up businesses, expansion of 33
existing operations, and new facility locations; and 34
(4) Federal net operating losses are carried forward 35
indefinitely up to eighty percent (80%) in one (1) year, and many states 36 HB1538
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conform to the federal law or provide uncapped twenty -year carry-forward 1
periods, while Arkansas is in the minority with a ten -year carry-forward 2
period. 3
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SECTION 2. Arkansas Code § 15 -4-2404(a), concerning the net operating 5
loss deduction carry -forward period for certain steel manufacturers, is 6
amended to read as follows: 7
(a) Taxpayers qualified for the benefits of this subchapter and 8
entitled to a net operating loss deduction as provided in § 26 -51-427 may 9
carry forward that deduction to the next -succeeding taxable year following 10
the year of the net operating loss and annually thereafter for a total period 11
of ten (10) twenty (20) years or until the net operating loss has been 12
exhausted, whichever is earlier. 13
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SECTION 3. Arkansas Code § 26 -51-427(1)(C)(i), concerning the carry -15
forward period for the income tax deduction for net operating loss, is 16
amended to read as follows: 17
(C)(i) For net operating losses occurring in taxable years 18
beginning on or after January 1, 2020, the net operating loss may be carried 19
over to the next succeeding taxable year and annually thereafter for the 20
following number of years next succeeding the tax year of the net operating 21
loss or until the net operating loss has been exhausted or absorbed by the 22
taxable income of a succeeding year, whichever is earlier: 23
(a) For net operating losses occurring in the 24
tax year beginning January 1, 2020, a total period of eight (8) years; and 25
(b) For net operating losses occurring in tax 26
years beginning on or after January 1, 2021, a total period of ten (10) 27
years; and 28
(c) For net operating losses occurring in tax 29
years beginning on or after January 1, 2025, a total period of twenty (20) 30
years. 31
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SECTION 4. Arkansas Code § 26 -51-427(1)(E)(ii), concerning the carry -33
forward period for the income tax deduction for net operating loss, is 34
amended to read as follows: 35
(ii) In the case of a qualified medical company, a 36 HB1538
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net operating loss for any taxable year shall be a net operating loss 1
carryover to each of the fifteen (15) twenty (20) taxable years following the 2
taxable year of the loss. 3
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SECTION 5. Arkansas Code § 26 -51-427(1)(E)(iv), concerning the carry -5
forward period for the income tax deduction for net operating loss, is 6
amended to read as follows: 7
(iv) The net operating loss provisions stated in 8
this subdivision (1)(E), which resulted from the operation of a qualified 9
medical company, are effective for taxable years beginning on and after 10
January 1, 1987 2025; 11
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SECTION 6. Arkansas Code § 26 -51-1203(a), concerning the carry -forward 13
period for the net operating loss deduction for certain steel mills, is 14
amended to read as follows: 15
(a) Taxpayers qualified under § 26 -51-1202(a) and (b), entitled to a 16
net operating loss deduction as provided in § 26 -51-427, may carry forward 17
that deduction to the next succeeding taxable year following the year of the 18
net operating loss and annually thereafter for a total period of ten (10) 19
twenty (20) years or until the net operating loss has been exhausted, 20
whichever is earlier. 21
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SECTION 7. Arkansas Code § 26 -51-1213(a), concerning the carry -forward 23
period for the net operating loss deduction for certain steel mills, is 24
amended to read as follows: 25
(a) Taxpayers qualified under § 26 -51-1212(2) and entitled to a net 26
operating loss deduction as provided in § 26 -51-427 may carry forward that 27
deduction to the next -succeeding taxable year following the year of such net 28
operating loss and annually thereafter for a total period of ten (10) twenty 29
(20) years or until such net operating loss has been exhausted, whichever is 30
earlier. 31
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SECTION 8. Arkansas Code § 26 -52-913 is amended to read as follows: 33
26-52-913. Net operating loss deduction — Carry forward. 34
Taxpayers qualified under § 26 -52-912(2) and entitled to a net 35
operating loss deduction as provided in § 26 -51-427 may carry forward that 36 HB1538
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deduction to the next -succeeding taxable year following the year of the net 1
operating loss and annually thereafter for a total period of ten (10) twenty 2
(20) years or until the net operating loss has been exhausted, whichever is 3
earlier. The net operating loss deduction must be carried forward in the 4
order named above. 5
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SECTION 9. EFFECTIVE DATE. Section s 1–8 of this act are effective for 7
tax years beginning on or after January 1, 2025. 8
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