| 1 | 1 | | Stricken language would be deleted from and underlined language would be added to present law. |
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| 2 | 2 | | *JLL182* 02/13/2025 3:36:48 PM JLL182 |
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| 3 | 3 | | State of Arkansas 1 |
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| 4 | 4 | | 95th General Assembly A Bill 2 |
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| 5 | 5 | | Regular Session, 2025 SENATE BILL 233 3 |
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| 6 | 6 | | 4 |
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| 7 | 7 | | By: Senator C. Penzo 5 |
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| 8 | 8 | | By: Representatives Lundstrum, Maddox 6 |
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| 9 | 9 | | 7 |
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| 10 | 10 | | For An Act To Be Entitled 8 |
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| 11 | 11 | | AN ACT TO AMEND THE INCOME TAX LAWS RELATING TO 9 |
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| 12 | 12 | | CERTAIN TRUSTS; TO PRESERVE CERTAIN TRUST ASSETS; TO 10 |
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| 13 | 13 | | EXEMPT CERTAIN TRUSTS FROM INCOME TAX; AND FOR OTHER 11 |
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| 14 | 14 | | PURPOSES. 12 |
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| 17 | 17 | | Subtitle 15 |
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| 18 | 18 | | TO AMEND THE INCOME TAX LAWS RELATING TO 16 |
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| 19 | 19 | | CERTAIN TRUSTS; TO PRESERVE CERTAIN 17 |
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| 20 | 20 | | TRUST ASSETS; AND TO EXEMPT CERTAIN 18 |
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| 21 | 21 | | TRUSTS FROM INCOME TAX. 19 |
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| 22 | 22 | | 20 |
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| 23 | 23 | | BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 21 |
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| 24 | 24 | | 22 |
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| 25 | 25 | | SECTION 1. DO NOT CODIFY. Legislative intent. 23 |
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| 26 | 26 | | It is the intent of the General Assembly to: 24 |
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| 27 | 27 | | (1) Reform Arkansas trust tax law to increase the state's 25 |
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| 28 | 28 | | competitiveness in the financial services sector by attracting out -of-state 26 |
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| 29 | 29 | | trust assets for administration by Arkansas trustees; 27 |
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| 30 | 30 | | (2) Recognize that Arkansas citizens currently establish trusts 28 |
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| 31 | 31 | | in foreign states to avoid trust -level taxation; 29 |
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| 32 | 32 | | (3) Recognize that foreign states are reaping the benefit that 30 |
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| 33 | 33 | | comes with the management and administration of trust assets in those states; 31 |
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| 34 | 34 | | and 32 |
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| 35 | 35 | | (4) Amend the law to remove the incentive for Arkansas residents 33 |
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| 36 | 36 | | to set up nongrantor trusts in foreign states that will encourage Arkansans 34 |
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| 37 | 37 | | to keep trust assets in state where Arkansas trustees will manage and 35 |
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| 38 | 38 | | administer the trust assets. 36 SB233 |
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| 39 | 39 | | |
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| 40 | 40 | | 2 02/13/2025 3:36:48 PM JLL182 |
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| 41 | 41 | | 1 |
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| 42 | 42 | | SECTION 2. Arkansas Code Title 26, Chapter 51, Subchapter 3, is amended 2 |
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| 43 | 43 | | to add an additional section to read as follows: 3 |
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| 44 | 44 | | 26-51-317. Nongrantor trusts. 4 |
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| 45 | 45 | | There is allowed an exemption from the income tax imposed under this 5 |
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| 46 | 46 | | chapter for a trust that is administered by a trustee who is a resident of 6 |
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| 47 | 47 | | this state if the trust is not considered a grantor trust under 26 U.S.C. ยง 7 |
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| 48 | 48 | | 671 et seq., as it existed on January 1, 2025, and any related regulations, 8 |
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| 49 | 49 | | as they existed on January 1, 2025. 9 |
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| 50 | 50 | | 10 |
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| 51 | 51 | | SECTION 3. EFFECTIVE DATE. This act is effective for tax years 11 |
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| 52 | 52 | | beginning on or after January 1, 2025. 12 |
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