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 SENATE BILL 233 3
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By: Senator C. Penzo 5
By: Representatives Lundstrum, Maddox 6
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For An Act To Be Entitled 8
AN ACT TO AMEND THE INCOME TAX LAWS RELATING TO 9
CERTAIN TRUSTS; TO PRESERVE CERTAIN TRUST ASSETS; TO 10
EXEMPT CERTAIN TRUSTS FROM INCOME TAX; AND FOR OTHER 11
PURPOSES. 12
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Subtitle 15
TO AMEND THE INCOME TAX LAWS RELATING TO 16
CERTAIN TRUSTS; TO PRESERVE CERTAIN 17
TRUST ASSETS; AND TO EXEMPT CERTAIN 18
TRUSTS FROM INCOME TAX. 19
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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 21
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SECTION 1. DO NOT CODIFY. Legislative intent. 23
It is the intent of the General Assembly to: 24
(1) Reform Arkansas trust tax law to increase the state's 25
competitiveness in the financial services sector by attracting out -of-state 26
trust assets for administration by Arkansas trustees; 27
(2) Recognize that Arkansas citizens currently establish trusts 28
in foreign states to avoid trust -level taxation; 29
(3) Recognize that foreign states are reaping the benefit that 30
comes with the management and administration of trust assets in those states; 31
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(4) Amend the law to remove the incentive for Arkansas residents 33
to set up nongrantor trusts in foreign states that will encourage Arkansans 34
to keep trust assets in state where Arkansas trustees will manage and 35
administer the trust assets. 36 SB233
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SECTION 2. Arkansas Code Title 26, Chapter 51, Subchapter 3, is amended 2
to add an additional section to read as follows: 3
26-51-317. Nongrantor trusts. 4
There is allowed an exemption from the income tax imposed under this 5
chapter for a trust that is administered by a trustee who is a resident of 6
this state if the trust is not considered a grantor trust under 26 U.S.C. ยง 7
671 et seq., as it existed on January 1, 2025, and any related regulations, 8
as they existed on January 1, 2025. 9
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SECTION 3. EFFECTIVE DATE. This act is effective for tax years 11
beginning on or after January 1, 2025. 12
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