Stricken language would be deleted from and underlined language would be added to present law.
*JLL284* 03/26/2025 3:39:49 PM JLL284
State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 SENATE BILL 568 3
4
By: Senators Crowell, Gilmore, Stone 5
By: Representatives Jean, Andrews, Dalby, Henley, M. Shepherd 6
7
For An Act To Be Entitled 8
AN ACT TO AMEND THE LAW CONCERNING THE TAXES 9
APPLICABLE TO LITHIUM EXTRACTION AND DEVELOPMENT; TO 10
INCLUDE ELECTRONIC WASTE IN THE DEFINITION OF "SOLID 11
WASTE" FOR PURPOSES OF THE SALES AND USE TAX 12
EXEMPTION FOR WASTE REDUCTION, REUSE, OR RECYCLING 13
EQUIPMENT; TO PROVIDE A SALES AND USE TAX EXEMPTION 14
FOR LITHIUM RESOURCE DEVELOPMENT; TO AMEND THE LAW 15
CONCERNING THE SEVERANCE TAX ON LITHIUM; TO PROVIDE 16
AN EXEMPTION FROM THE SEVERANCE TAX FOR LITHIUM 17
EXTRACTION; AND FOR OTHER PURPOSES. 18
19
20
Subtitle 21
TO AMEND THE LAW CONCERNING THE TAXES 22
APPLICABLE TO LITHIUM EXTRACTION AND 23
DEVELOPMENT; TO PROVIDE A SALES AND USE 24
TAX EXEMPTION FOR LITHIUM RESOURCE 25
DEVELOPMENT; AND TO AMEND THE LAW 26
CONCERNING THE SEVERANCE TAX ON LITHIUM. 27
28
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 29
30
SECTION 1. Arkansas Code § 19 -6-301(61) and (62), concerning the 31
enumeration of special revenues, are amended to read as follows: 32
(61) Brine taxes imposed upon all brine produced in the state 33
for the purpose of bromine or lithium extraction, as enacted by Acts 1979, 34
No. 759, and all laws amendatory thereto, § 26 -58-301; 35
(62) Oil and Gas Commission fees, including oil assessments, gas 36 SB568
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assessments in excess of four and one -half (4½) mills each fiscal year until 1
July 1, 2023, under § 15 -71-107(b)(2)(A)(i), drilling permits, permits for 2
plugging wells, and permits for each salt water well, all as enacted by Acts 3
1939, No. 105, and all laws amendatory thereto, §§ 15 -71-101 — 15-71-112, 15-4
72-101 — 15-72-110, 15-72-205, 15-72-212, 15-72-216, 15-72-301 — 15-72-324, 5
and 15-72-401 — 15-72-407, and the portion of taxes levied on salt water used 6
in bromine or lithium production, as enacted by Acts 1947, No. 136, and all 7
laws amendatory thereto, § 26 -58-111(9); 8
9
SECTION 2. Arkansas Code § 26 -51-506(b)(15), concerning the 10
definitions to be used with respect to the income tax credit for waste 11
reduction, reuse, or recycling equipment, is amended to read as follows: 12
(15) “Solid waste” means all putrescible and nonputrescible 13
wastes in solid or semisolid form, including, but not limited to, yard or 14
food waste, waste glass, waste metals, waste plastics, wastepapers, waste 15
paperboard, electronic waste, lithium -ion battery cells and battery packs, 16
and all other solid or semisolid wastes resulting from industrial, 17
commercial, agricultural, community, and residential activities; 18
19
SECTION 3. Arkansas Code Title 26, Chapter 52, Subchapter 4, is 20
amended to add an additional section to read as follows: 21
26-52-457. Lithium resources development — Definitions. 22
(a) As used in this section: 23
(1) "Eligible facility costs" means expenditures for the 24
development, acquisition, construction, expansion, renovation, refurbishment, 25
maintenance, and operation of a qualified facility, including without 26
limitation costs incurred for land, buildings, site improvements, permitting, 27
lease payments, site characterization and assessment, engineering, and design 28
used directly and exclusively for a qualified facility; 29
(2) "Facility" means a tract or adjacent tracts of land in the 30
state and any structures and tangible personal property contained on the land 31
that are for the operation of a lithium, cathode, anode, lithium battery, and 32
grid storage facility or are directly engaged in the extraction, processing, 33
refining, conversion, manufacturing, and recycling of lithium or lithium 34
products; 35
(3)(A) "Lithium, cathode, anode, lithium battery, and grid 36 SB568
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storage facility equipment" means equipment and related services whether 1
purchased or leased for immediate use or stored for future use in this state 2
and other enabling machinery, equipment, software, and hardware purchased or 3
leased for the further extraction, processing, development, refinement, 4
conversion, manufacturing, or recycling of lithium, cathode, anode, lithium 5
battery, and grid storage products. 6
(B) "Lithium, cathode, anode, lithium battery, and grid 7
storage facility equipment" includes without limitation: 8
(i) Equipment and materials used for: 9
(a) The direct extraction, processing, 10
refining, conversion, manufacturing, or recycling of lithium or lithium 11
products, including without limitation lithium hydroxide and lithium 12
carbonate; 13
(b) The development or manufacturing of 14
cathode facilities and cathode active materials, anode facilities and anode 15
active materials, grid storage facilities and electrolytes, separator 16
facilities, or lithium battery recycling facilities; 17
(c) Equipment and input materials used in the 18
operation of a qualified facility, including without limitation a component 19
part, installation, refreshment, replacement, or upgrade of a qualified 20
facility whether or not the property is affixed to or incorporated into real 21
property; 22
(d) Equipment necessary for the 23
transformation, generation, distribution, storage, or management of 24
electricity that is required to operate equipment of a qualified facility, 25
including without limitation any substation, generator, uninterruptible 26
energy equipment, supply, conduit, fuel piping and storage, cabling, duct 27
bank, switch, switchboard, battery bank or energy storage system, testing 28
equipment, and backup generator; and 29
(e) Water conservation systems, including 30
without limitation a mechanism that is designed to collect, conserve, and 31
reuse water; and 32
(ii) Labor services to install, repair, service, 33
alter, fabricate, or maintain equipment and materials described in 34
subdivision (a)(3)(B)(i) of this section; 35
(4) "Qualified facility" means one (1) or more facilities, 36 SB568
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including any addition to or expansion of a facility, owned or operated by a 1
qualified firm that: 2
(A) Creates a qualified investment of at least one hundred 3
million dollars ($100,000,000) within the state no later than ten (10) years 4
after the start of construction of the facility; 5
(B) Directly or indirectly pays an aggregate annualized 6
compensation of at least two million dollars ($2,000,000) to employees within 7
the state over the two (2) calendar years following the calendar year in 8
which the facility commences operations; and 9
(C) Has received a positive cost -benefit analysis from the 10
Arkansas Economic Development Commission for the facility; 11
(5) "Qualified firm" means a for -profit business establishment 12
that is: 13
(A) Subject to state income, sales, and property taxes; 14
(B) The owner or operator of a facility; 15
(C) Engaged in developing lithium, cathode, anode, lithium 16
battery, and grid storage facility equipment; and 17
(6) "Qualified investment" means, with respect to a qualified 18
facility, the aggregate, nonduplicative, eligible facility costs expended by 19
a qualified firm in the state. 20
(b) The gross receipts or gross proceeds derived from the purchase or 21
sale of the following are exempt from the gross receipts tax levied by this 22
chapter and the compensating use tax levied by the Arkansas Compensating Tax 23
Act of 1949, § 26-53-101 et seq.: 24
(1) Lithium, cathode, anode, lithium battery, and grid storage 25
facility equipment; 26
(2) Services purchased for the purpose of and in conjunction 27
with developing, acquiring, constructing, expanding, renovating, 28
refurbishing, and operating a qualified facility; 29
(3) Electricity used by a qualified facility; and 30
(4) Equipment, materials, and products for the further 31
processing of materials used in manufacturing lithium, cathode, anode, 32
lithium battery, and grid storage facility equipment in the state. 33
(c)(1) To claim the exemption provided under this section, a qualified 34
firm shall submit an application for a qualified facility to the Department 35
of Finance and Administration. 36 SB568
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(2) A qualified firm is eligible for the exemption provided 1
under this section upon the creation of a minimum qualified investment of at 2
least one hundred million dollars ($100,000,000), if the qualified investment 3
is created no later than ten (10) years after the start of construction of 4
the qualified facility that is the subject of the application submitted under 5
this subsection. 6
(3)(A) Within thirty (30) days after receiving a completed 7
application under this subsection, the department shall grant or deny the 8
application in whole or in part. 9
(B) If an application submitted under this subsection is 10
denied as incomplete and the qualified firm submitting the application 11
provides the additional information or documentation required by the 12
department or otherwise completes its application within thirty (30) days of 13
the notice of denial, the application shall be considered completed as of the 14
original date of submission. 15
(C) If an application submitted under this subsection is 16
denied as incomplete and the qualified firm submitting the application fails 17
to provide the information or documentation required by the department or 18
complete its application within thirty (30) days of the notice of denial, the 19
application shall remain denied and may be resubmitted in full with a new 20
submission date. 21
(D) If an application submitted under this subsection is 22
complete and meets the requirements of this section, the department shall 23
approve the application and certify that the qualified facility is eligible 24
for the exemption provided under this section. 25
(4) Once an application is approved under this subsection: 26
(A) The department shall transmit an approved financial 27
incentive certificate to the qualified firm; and 28
(B) The exemption provided under this section may be 29
claimed by the qualified facility. 30
(d) Upon confirmation that the minimum qualified investment required 31
under subdivision (a)(4)(A) of this section has been met, the department 32
shall issue a rebate to the qualified firm for any sales or use tax paid on 33
the eligible facility costs used to determine the minimum qualified 34
investment. 35
(e)(1) After receiving an approved financial incentive certificate 36 SB568
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from the department under subdivision (c)(4)(A) of this section, a qualified 1
firm shall certify annually, for each calendar year in which the qualified 2
firm is subject to the compensation requirement provided in subdivision 3
(a)(4)(B) of this section, the aggregate annualized compensation at the 4
qualified facility for the calendar year. 5
(2) Data reported to the department under this subsection shall 6
be used only to determine eligibility for the exemption provided under this 7
section. 8
(f) An approved financial incentive certificate transmitted under 9
subdivision (c)(4)(A) of this section shall be revoked if: 10
(1) The qualified facility ceases operations within ten (10) 11
years of the commencement of construction; 12
(2) The qualified facility fails to meet the qualified 13
investment requirement under subdivision (a)(4)(A) of this section; or 14
(3) The aggregate annualized compensation of a qualified 15
facility falls below the required aggregate compensation stated in 16
subdivision (a)(4)(B) of this section. 17
18
SECTION 4. Arkansas Code § 26 -58-111(9), concerning the rate of the 19
severance tax, is amended to read as follows: 20
(9) On salt water whose naturally dissolved components, or 21
solutes, are used as source raw materials for bromine , lithium, and other 22
products derived from the same salt water used in the bromine or lithium 23
production, two dollars and forty -five cents ($2.45) per one thousand (1,000) 24
barrels, forty-two thousand United States gallons (42,000 U.S. gals.); and 25
26
SECTION 5. Arkansas Code § 26 -58-124(a), concerning distribution of 27
the severance tax, is amended to read as follows: 28
(a) All taxes, penalties, and costs collected by the Secretary of the 29
Department of Finance and Administration under the provisions of this 30
subchapter, except for the taxes, penalties, and costs collected on natural 31
gas and salt water, shall be deposited into the State Treasury to the credit 32
of the State Apportionment Fund. 33
34
SECTION 6. Arkansas Code § 26 -58-124, concerning distribution of the 35
severance tax, is amended to add an additional subsection to read as follows: 36 SB568
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(d) All taxes, penalties, and costs collected by the secretary on salt 1
water shall be deposited into the State Treasury as follows: 2
(1) The Treasurer of State shall allocate the first three 3
hundred twenty-five thousand dollars ($325,000) collected each fiscal year in 4
the following manner on or before the fifth of the month next following the 5
month during which funds under this subsection are received by the Treasurer 6
of State: 7
(A) Forty-five cents (45¢) of the fee levied per one 8
thousand (1,000) barrels shall be deposited and credited as provided in § 26 -9
58-125; and 10
(B) Of the amount remaining after the allocation under 11
subdivision (d)(1)(A) of this section: 12
(i) Three percent (3%) shall be allocated to the 13
General Revenue Fund Account of the State Apportionment Fund to be used for 14
defraying the necessary expenses of the state government; and 15
(ii) Ninety-seven percent (97%) shall be allocated 16
as follows: 17
(a) Seventy-five percent (75%) shall be 18
general revenues and shall be allocated to the various State Treasury funds 19
participating in general revenues in the respective proportions to each as 20
provided by and to be used for the respective purposes set forth in the 21
Revenue Stabilization Law, § 19 -5-101 et seq.; and 22
(b) Twenty-five percent (25%) shall be special 23
revenues and shall be allocated to the County Aid Fund; and 24
(2) The Treasurer of State shall allocate funds collected each 25
fiscal year in excess of three hundred twenty -five thousand dollars 26
($325,000) in the following manner on or before the fifth of the month next 27
following the month during which funds under this subsection are received by 28
the Treasurer of State: 29
(A) Forty-five cents (45¢) of the fee levied per one 30
thousand (1,000) barrels shall be deposited and credited as provided in § 26 -31
58-125; and 32
(B) Of the amount remaining after the allocation under 33
subdivision (d)(2)(A) of this section: 34
(i) Three percent (3%) shall be allocated to the 35
General Revenue Fund Account of the State Apportionment Fund to be used for 36 SB568
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defraying the necessary expenses of the state government; and 1
(ii)(a) Ninety-seven percent (97%) shall be special 2
revenues and shall be allocated to the County Aid Fund. 3
(b) On or before the tenth of the month 4
following the end of each calendar quarter, the Treasurer of State shall 5
remit by state warrants to the various county treasurers all funds under 6
subdivision (d)(2)(B)(ii)(a) of this section then received by him or her 7
during the quarterly period and transferred to the County Aid Fund in the 8
proportions of the funds as between the respective counties that, as 9
certified by the secretary to the Treasurer of State, the salt water 10
severance tax produced from each respective county bears to the total of the 11
taxes produced from all counties. 12
(c) Upon receipt of any taxes under 13
subdivision (d)(2)(B)(ii)(b) of this section, each county treasurer shall 14
credit the entire amount to the county road fund for use for the same 15
purposes as other moneys credited to the county road fund. 16
17
SECTION 7. Arkansas Code § 26 -58-301(b)(1), concerning the tax levied 18
for the benefit of the Arkansas Museum of Natural Resources Fund, is amended 19
to read as follows: 20
(b)(1) There is levied upon all brine produced in the state for the 21
purpose of bromine or lithium extraction a tax of twenty cents (20¢) per one 22
thousand (1,000) barrels. 23
24
SECTION 8. Arkansas Code § 26 -58-302(b)(1), concerning the additional 25
tax levied for the benefit of the Arkansas Museum of Natural Resources Fund, 26
is amended to read as follows: 27
(b)(1) There is levied a tax of ten cents (10¢) per one thousand 28
(1,000) barrels on all brine produced in this state for the purpose of 29
bromine or lithium extraction. 30
31
SECTION 9. DO NOT CODIFY. TEMPORARY LANGUAGE. Severance tax exemption 32
for lithium extraction. 33
(a)(1) Beginning July 1, 2028, a new brine unit created by a producer 34
of natural resources after January 1, 2023, is exempt from the severance tax 35
on salt water levied under § 26 -58-111(9). 36 SB568
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(2) For the purposes of this section, a new brine unit created 1
by a producer of natural resources does not include: 2
(A) A brine production area recognized by the Oil and Gas 3
Commission before January 1, 2023; or 4
(B) A size reduction or transfer of one (1) or more 5
contiguous tracts of a brine production unit or brine expansion unit under 6
Acts 2025, No. 254. 7
(b)(1) A producer of natural resources claiming the exemption provided 8
under this section shall file a report in the form prescribed by the 9
Secretary of the Department of Finance and Administration within twenty -five 10
(25) days after the end of each month that states: 11
(A) The total number of barrels of salt water produced by 12
the producer of natural resources; 13
(B) The amount of severance tax that would have been due 14
on the production of salt water if the producer of natural resources were not 15
exempt from the severance tax on salt water under this section; and 16
(C) Any other information reasonably required by the 17
secretary for the enforcement of Arkansas Code § 26 -58-101 et seq. 18
(2) The report required under subdivision (b)(1) of this section 19
shall be verified by: 20
(A) In the instance of an individual producer of natural 21
resources or the primary processor, the producer of natural resources or the 22
primary processer; and 23
(B) In all other instances: 24
(i) A member or officer of the producer of natural 25
resources or the primary processor; or 26
(ii) The manager of the producer of natural 27
resources or the primary processor. 28
(c) This section expires June 30, 2033. 29
30
SECTION 10. EFFECTIVE DATE. Sections 1 -8 of this act are effective on 31
and after October 1, 2025. 32
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