Stricken language would be deleted from and underlined language would be added to present law.
Act 1012 of the Regular Session
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State of Arkansas As Engrossed: S4/1/25 S4/8/25 S4/9/25 1
95th General Assembly A Bill 2
Regular Session, 2025 SENATE BILL 568 3
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By: Senators Crowell, Gilmore, Stone 5
By: Representatives Jean, Andrews, Dalby, Henley, M. Shepherd 6
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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; AND FOR 16
OTHER PURPOSES. 17
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Subtitle 20
TO AMEND THE LAW CONCERNING THE TAXES 21
APPLICABLE TO LITHIUM EXTRACTION AND 22
DEVELOPMENT; TO PROVIDE A SALES AND USE 23
TAX EXEMPTION FOR LITHIUM RESOURCE 24
DEVELOPMENT; AND TO AMEND THE LAW 25
CONCERNING THE SEVERANCE TAX ON LITHIUM. 26
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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 28
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SECTION 1. Arkansas Code § 19 -6-301(61) and (62), concerning the 30
enumeration of special revenues, are amended to read as follows: 31
(61) Brine taxes imposed upon all brine produced in the state 32
for the purpose of bromine or lithium extraction, as enacted by Acts 1979, 33
No. 759, and all laws amendatory thereto, § 26 -58-301; 34
(62) Oil and Gas Commission fees, including oil assessments, gas 35
assessments in excess of four and one -half (4½) mills each fiscal year until 36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
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July 1, 2023, under § 15 -71-107(b)(2)(A)(i), drilling permits, permits for 1
plugging wells, and permits for each salt water well, all as enacted by Acts 2
1939, No. 105, and all laws amendatory thereto, §§ 15 -71-101 — 15-71-112, 15-3
72-101 — 15-72-110, 15-72-205, 15-72-212, 15-72-216, 15-72-301 — 15-72-324, 4
and 15-72-401 — 15-72-407, and the portion of taxes levied on salt water used 5
in bromine or lithium production, as enacted by Acts 1947, No. 136, and all 6
laws amendatory thereto, § 26 -58-111(9); 7
8
SECTION 2. Arkansas Code § 26 -51-506(b)(15), concerning the 9
definitions to be used with respect to the income tax credit for waste 10
reduction, reuse, or recycling equipment, is amended to read as follows: 11
(15) “Solid waste” means all putrescible and nonputrescible 12
wastes in solid or semisolid form, including, but not limited to, yard or 13
food waste, waste glass, waste metals, waste plastics, wastepapers, waste 14
paperboard, electronic waste, lithium -ion battery cells and battery packs, 15
and all other solid or semisolid wastes resulting from industrial, 16
commercial, agricultural, community, and residential activities; 17
18
SECTION 3. Arkansas Code Title 26, Chapter 52, Subchapter 4, is 19
amended to add an additional section to read as follows: 20
26-52-457. Lithium resources development — Definitions. 21
(a) As used in this section: 22
(1) "Direct compensation" means wages, salaries, bonuses, and 23
commissions; 24
(2) "Eligible facility costs" means expenditures for the 25
development, acquisition, construction, expansion, renovation, refurbishment, 26
maintenance, and operation of a qualified facility, including without 27
limitation costs incurred for land, buildings, site improvements, permitting, 28
facility lease payments, site characterization and assessment, engineering, 29
and design used directly and exclusively for a qualified facility; 30
(3) "Facility" means a tract or adjacent tracts of land in the 31
state and any structures and tangible personal property contained on the land 32
that are for the operation of a lithium, cathode, anode, lithium battery, and 33
grid storage facility or are directly engaged in the processing, refining, 34
conversion, manufacturing, and recycling of lithium or lithium products; 35
(4) "Indirect compensation" means actual costs incurred for: 36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
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(A) Health, life, and disability insurance coverage; 1
(B) Retirement benefits, including without limitation 2
pensions, annuities, and matching retirement fund contributions; and 3
(C) Moving, relocation, and housing benefits; 4
(5)(A) "Lithium, cathode, anode, lithium battery, and grid 5
storage facility equipment" means equipment and related services whether 6
purchased or leased for immediate use or stored for future use in this state 7
and other enabling machinery, equipment, software, and hardware purchased or 8
leased for the further processing, development, refinement, conversion, 9
manufacturing, or recycling of lithium, cathode, anode, lithium battery, and 10
grid storage products. 11
(B) "Lithium, cathode, anode, lithium battery, and grid 12
storage facility equipment" includes without limitation: 13
(i) Equipment and materials used for: 14
(a) The direct processing, refining, 15
conversion, manufacturing, or recycling of lithium or lithium products, 16
including without limitation lithium hydroxide and lithium carbonate; 17
(b) The development or manufacturing of 18
cathode facilities and cathode active materials, anode facilities and anode 19
active materials, grid storage facilities and electrolytes, separator 20
facilities, or lithium battery recycling facilities; 21
(c) Equipment and input materials used in the 22
operation of a qualified facility, including without limitation a component 23
part, installation, refreshment, replacement, or upgrade of a qualified 24
facility whether or not the property is affixed to or incorporated into real 25
property; 26
(d) Equipment necessary for the 27
transformation, generation, distribution, storage, or management of 28
electricity that is required to operate equipment of a qualified facility, 29
including without limitation any substation, generator, uninterruptible 30
energy equipment, supply, conduit, fuel piping and storage, cabling, duct 31
bank, switch, switchboard, battery bank or energy storage system, testing 32
equipment, and backup generator; and 33
(e) Water conservation systems, including 34
without limitation a mechanism that is designed to collect, conserve, and 35
reuse water; and 36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
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(ii) Labor services to install, repair, service, 1
alter, fabricate, or maintain equipment and materials described in 2
subdivision (a)(5)(B)(i) of this section; 3
(6) "Qualified facility" means one (1) or more facilities, 4
including any addition to or expansion of a facility, owned or operated by a 5
qualified firm that: 6
(A) Creates a qualified investment of at least one hundred 7
million dollars ($100,000,000) within the state no later than ten (10) years 8
after the start of construction of the facility; 9
(B) Annually pays total direct compensation and indirect 10
compensation of at least three million dollars ($3,000,000) to employees 11
within the state over the two (2) calendar years following the calendar year 12
in which the facility commences operations; and 13
(C) Has received a positive cost -benefit analysis from the 14
Arkansas Economic Development Commission for the facility; 15
(7) "Qualified firm" means a for -profit business establishment 16
that is: 17
(A) Subject to state income, sales, and property taxes; 18
(B) The owner or operator of a facility; 19
(C) Engaged in developing lithium, cathode, anode, lithium 20
battery, and grid storage facility equipment; and 21
(8) "Qualified investment" means, with respect to a qualified 22
facility, the aggregate, nonduplicative, eligible facility costs expended by 23
a qualified firm in the state. 24
(b)(1) The gross receipts or gross proceeds derived from the purchase 25
or sale of the following are exempt from the gross receipts tax levied by 26
this chapter and the compensating use tax levied by the Arkansas Compensating 27
Tax Act of 1949, § 26 -53-101 et seq.: 28
(A) Lithium, cathode, anode, lithium battery, and grid storage 29
facility equipment; 30
(B) Services purchased for the purpose of and in conjunction 31
with developing, acquiring, constructing, expanding, renovating, 32
refurbishing, and operating a qualified facility; 33
(C) Electricity used by a qualified facility; and 34
(D) Equipment, materials, and products for the further 35
processing of materials used in manufacturing lithium, cathode, anode, 36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
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lithium battery, and grid storage facility equipment in the state. 1
(2) Equipment, materials, products, land, and services 2
purchased, leased, or rented for the extraction of salt water are 3
specifically excluded from the exemption provided under subdivision (b)(1) of 4
this section. 5
(c)(1) To claim the exemption provided under this section, a qualified 6
firm shall submit an application for a qualified facility to the Department 7
of Finance and Administration. 8
(2) A qualified firm is eligible for the exemption provided 9
under this section upon the creation of a minimum qualified investment of at 10
least one hundred million dollars ($100,000,000), if the qualified investment 11
is created no later than ten (10) years after the start of construction of 12
the qualified facility that is the subject of the application submitted under 13
this subsection. 14
(3)(A) Within thirty (30) days after receiving a completed 15
application under this subsection, the department shall grant or deny the 16
application in whole or in part. 17
(B) If an application submitted under this subsection is 18
denied as incomplete and the qualified firm submitting the application 19
provides the additional information or documentation required by the 20
department or otherwise completes its application within thirty (30) days of 21
the notice of denial, the application shall be considered completed as of the 22
original date of submission. 23
(C) If an application submitted under this subsection is 24
denied as incomplete and the qualified firm submitting the application fails 25
to provide the information or documentation required by the department or 26
complete its application within thirty (30) days of the notice of denial, the 27
application shall remain denied and may be resubmitted in full with a new 28
submission date. 29
(D) If an application submitted under this subsection is 30
complete and meets the requirements of this section, the department shall 31
approve the application and certify that the qualified facility is eligible 32
for the exemption provided under this section. 33
(4) Once an application is approved under this subsection: 34
(A) The department shall transmit an approved financial 35
incentive certificate to the qualified firm; and 36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
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(B) The exemption provided under this section may be 1
claimed by the qualified facility. 2
(d) Upon confirmation that the minimum qualified investment required 3
under subdivision (a)(6)(A) of this section has been met, the department 4
shall issue a rebate to the qualified firm for any state sales or use tax 5
paid on the eligible facility costs used to determine the minimum qualified 6
investment. 7
(e) After receiving an approved financial incentive certificate from 8
the department under subdivision (c)(4)(A) of this section, a qualified firm 9
shall certify annually, for each calendar year in which the qualified firm is 10
subject to the compensation requirement provided in subdivision (a)(6)(B) of 11
this section, the aggregate annualized compensation at the qualified facility 12
for the calendar year. 13
(f) An approved financial incentive certificate transmitted under 14
subdivision (c)(4)(A) of this section shall be revoked if: 15
(1) The qualified facility ceases operations within ten (10) 16
years of the commencement of construction; 17
(2) The qualified facility fails to meet the qualified 18
investment requirement under subdivision (a)(6)(A) of this section; or 19
(3) The aggregate annualized compensation of a qualified 20
facility falls below the required aggregate compensation stated in 21
subdivision (a)(6)(B) of this section. 22
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SECTION 4. Arkansas Code § 26 -58-111(9), concerning the rate of the 24
severance tax, is amended to read as follows: 25
(9) On salt water whose naturally dissolved components, or 26
solutes, are used as source raw materials for bromine , lithium, and other 27
products derived from the same salt water used in the bromine or lithium 28
production, two dollars and forty -five cents ($2.45) per one thousand (1,000) 29
barrels, forty-two thousand United States gallons (42,000 U.S. gals.); and 30
31
SECTION 5. Arkansas Code § 26 -58-124(a), concerning distribution of 32
the severance tax, is amended to read as follows: 33
(a) All taxes, penalties, and costs collected by the Secretary of the 34
Department of Finance and Administration under the provisions of this 35
subchapter, except for the taxes, penalties, and costs collected on natural 36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
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gas and salt water, shall be deposited into the State Treasury to the credit 1
of the State Apportionment Fund. 2
3
SECTION 6. Arkansas Code § 26 -58-124, concerning distribution of the 4
severance tax, is amended to add an additional subsection to read as follows: 5
(d) All taxes, penalties, and costs collected by the secretary on salt 6
water shall be deposited into the State Treasury as follows: 7
(1) The Treasurer of State shall allocate the first three 8
hundred twenty-five thousand dollars ($325,000) collected each fiscal year in 9
the following manner on or before the fifth of the month next following the 10
month during which funds under this subsection are received by the Treasurer 11
of State: 12
(A) Forty-five cents (45¢) of the fee levied per one 13
thousand (1,000) barrels shall be deposited and credited as provided in § 26 -14
58-125; and 15
(B) Of the amount remaining after the allocation under 16
subdivision (d)(1)(A) of this section: 17
(i) Three percent (3%) shall be allocated to the 18
General Revenue Fund Account of the State Apportionment Fund to be used for 19
defraying the necessary expenses of the state government; and 20
(ii) Ninety-seven percent (97%) shall be allocated 21
as follows: 22
(a) Seventy-five percent (75%) shall be 23
general revenues and shall be allocated to the various State Treasury funds 24
participating in general revenues in the respective proportions to each as 25
provided by and to be used for the respective purposes set forth in the 26
Revenue Stabilization Law, § 19 -5-101 et seq.; and 27
(b) Twenty-five percent (25%) shall be special 28
revenues and shall be allocated to the County Aid Fund; and 29
(2) The Treasurer of State shall allocate funds collected each 30
fiscal year in excess of three hundred twenty -five thousand dollars 31
($325,000) in the following manner on or before the fifth of the month next 32
following the month during which funds under this subsection are received by 33
the Treasurer of State: 34
(A) Forty-five cents (45¢) of the fee levied per one 35
thousand (1,000) barrels shall be deposited and credited as provided in § 26 -36 As Engrossed: S4/1/25 S4/8/25 S4/9/25 SB568
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58-125; and 1
(B) Of the amount remaining after the allocation under 2
subdivision (d)(2)(A) of this section: 3
(i) Three percent (3%) shall be allocated to the 4
General Revenue Fund Account of the State Apportionment Fund to be used for 5
defraying the necessary expenses of the state government; and 6
(ii)(a) Ninety-seven percent (97%) shall be special 7
revenues and shall be allocated to the County Aid Fund. 8
(b) On or before the tenth of the month 9
following the end of each calendar quarter, the Treasurer of State shall 10
remit by state warrants to the various county treasurers all funds under 11
subdivision (d)(2)(B)(ii)(a) of this section then received by him or her 12
during the quarterly period and transferred to the County Aid Fund in the 13
proportions of the funds as between the respective counties that, as 14
certified by the secretary to the Treasurer of State, the salt water 15
severance tax produced from each respective county bears to the total of the 16
taxes produced from all counties. 17
(c) Upon receipt of any taxes under 18
subdivision (d)(2)(B)(ii)(b) of this section, each county treasurer shall 19
credit the entire amount to the county road fund for use for the same 20
purposes as other moneys credited to the county road fund. 21
22
SECTION 7. Arkansas Code § 26 -58-301(b)(1), concerning the tax levied for 23
the benefit of the Arkansas Museum of Natural Resources Fund, is amended to 24
read as follows: 25
(b)(1) There is levied upon all brine produced in the state for the 26
purpose of bromine or lithium extraction a tax of twenty cents (20¢) per one 27
thousand (1,000) barrels. 28
29
SECTION 8. Arkansas Code § 26-58-302(b)(1), concerning the additional 30
tax levied for the benefit of the Arkansas Museum of Natural Resources Fund, 31
is amended to read as follows: 32
(b)(1) There is levied a tax of ten cents (10¢) per one thousand 33
(1,000) barrels on all brine produced in this state for the purpose of 34
bromine or lithium extraction. 35
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SECTION 9. EFFECTIVE DATE. Sections 1-8 of this act are effective on 1
and after October 1, 2025. 2
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/s/Crowell 4
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APPROVED: 4/22/25 7
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