Stricken language would be deleted from and underlined language would be added to present law.
*JLL207* 03/05/2025 12:40:46 PM JLL207
State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1702 3
4
By: Representative Wooldridge 5
By: Senator J. Petty 6
7
For An Act To Be Entitled 8
AN ACT TO AMEND THE SALES AND USE TAX EXEMPTIONS FOR 9
CERTAIN MACHINERY AND EQUIPMENT USED IN 10
MANUFACTURING; TO PROVIDE A SALES AND USE TAX 11
EXEMPTION FOR MACHINERY AND EQUIPMENT USED IN CLOSED -12
LOOP RECYCLING; AND FOR OTHER PURPOSES. 13
14
15
Subtitle 16
TO AMEND THE SALES AND USE TAX 17
EXEMPTIONS FOR CERTAIN MACHINERY AND 18
EQUIPMENT USED IN MANUFACTURING; AND TO 19
PROVIDE A SALES AND USE TAX EXEMPTION 20
FOR MACHINERY AND EQUIPMENT USED IN 21
CLOSED-LOOP RECYCLING. 22
23
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 24
25
SECTION 1. Arkansas Code § 26-52-402(c)(2)(B), concerning the 26
machinery and equipment that is included in the list of machinery and 27
equipment that is used directly in the manufacturing process for purposes of 28
the sales tax exemption on certain machinery and equipment, is amended to add 29
an additional subdivision to read as follows: 30
(vii)(a) Machinery and equipment used to 31
mechanically recycle post -use materials in a closed -loop circular process, 32
including without limitation machinery and equipment: 33
(1) Used to identify, gather, transport, 34
and store post-use materials; 35
(2) Used to convert post -use materials 36 HB1702
2 03/05/2025 12:40:46 PM JLL207
into raw materials, work -in-process materials, or a finished product; and 1
(3) That convey converted post -use 2
materials directly to where it is reintroduced into the taxpayer’s 3
manufacturing process. 4
(b) As used in this subdivision 5
(c)(2)(B)(vii): 6
(1) “Closed-loop circular process” means 7
a manufacturing process in which reclaimed post -use materials are converted 8
and reintroduced into the original process and become a recognized component 9
of the finished product; 10
(2)(A) “Mechanically recycle” means to 11
reclaim and convert post -use materials into materials that are recognized in 12
the finished product using a series of physical processes. 13
(B) “Mechanically recycle” 14
includes without limitation washing, drying, grinding, regranulating, and 15
compounding; and 16
(3) “Post-use material” means a material 17
that is: 18
(A) Generated and reclaimed 19
directly from the taxpayer’s manufacturing process; 20
(B) Managed as an item of value in 21
a controlled manner; 22
(C) Intended to be mechanically 23
recycled into an item of raw materials, work -in-process material, or a 24
finished product; 25
(D) Not originated as a post -26
consumer waste material; and 27
(E) Not mixed with any other solid 28
waste or hazardous waste onsite or during processing; and 29
30
SECTION 2. Arkansas Code § 26 -53-114(c)(3)(B), concerning the 31
machinery and equipment that is included in the list of machinery and 32
equipment that is used directly in the manufacturing process for purposes of 33
the use tax exemption on certain machinery and equipment, is amended to add 34
an additional subdivision to read as follows: 35
(vi)(a) Machinery and equipment used to mechanically 36 HB1702
3 03/05/2025 12:40:46 PM JLL207
recycle post-use materials generated directly from the manufacturing 1
operation in a closed -loop circular process, including without limitation 2
machinery and equipment: 3
(1) Used to identify, gather, transport, 4
and store post-use materials; 5
(2) Used to convert post -use materials 6
into raw materials, work -in-process materials, or a finished product; and 7
(3) That convey converted post -use 8
materials directly to where it is reintroduced into the taxpayer’s 9
manufacturing process. 10
(b) As used in this subdivision (c)(3)(B)(vi): 11
(1) “Closed-loop circular process” means 12
a manufacturing process in which reclaimed post -use materials are converted 13
and reintroduced into the original process and become a recognized component 14
of the finished product; 15
(2)(A) “Mechanically recycle” means to 16
reclaim and convert post -use materials into materials that are recognized in 17
the finished product using a series of physical processes. 18
(B) “Mechanically recycle” 19
includes without limitation washing, drying, grinding, regranulating, and 20
compounding; and 21
(3) “Post-use material” means a material 22
that is: 23
(A) Generated and reclaimed 24
directly from the taxpayer’s manufacturing process; 25
(B) Managed as an item of value in 26
a controlled manner; 27
(C) Intended to be mechanically 28
recycled into an item of raw materials, work -in-process material, or a 29
finished product; 30
(D) Not originated as a post -31
consumer waste material; and 32
(E) Not mixed with any other solid 33
waste or hazardous waste onsite or during processing; and 34
35
SECTION 3. EFFECTIVE DATE. Sections 1 and 2 of this act are effective 36 HB1702
4 03/05/2025 12:40:46 PM JLL207
on the first day of the calendar quarter following the effective date of this 1
act. 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