After closing out the 2022 fiscal year on June 30th with a $1.6 billion surplus, Arkansas Governor Asa Hutchinson announced that he has reached agreement with the General Assembly on tax cuts to implement through a special session to be held in early August. The Governor is expected to include income tax cuts and business tax cuts on his call to convene the legislature. The income tax cuts would accelerate the implementation of tax cuts that were already set to go into effect in future years, and the business tax cuts would focus on depreciation and deductions under Section 179 of the Internal Revenue Code for purchasing machinery and equipment put into service for businesses. Both policies are aimed at providing relief for inflationary pressures facing individuals and businesses.
In early June, the Ag Council of Arkansas joined several other agricultural related trade organizations on a letter urging the governor and legislature to consider utilizating the record surplus to bring Arkansas into conformity with the federal law for 179 deductions. Such a change to the state tax code is a major priority for the Ag Council as it would simplify the tax filings for small businesses and farms, increase competitiveness with other states, provide meaningful relief against inflation, and help stimulate the economy to reduce recessionary risks and job losses.