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Arkansas policymakers are preparing for a pivotal 2026 fiscal session, set to convene at noon on April 8, with pre-filing of appropriation bills beginning March 9. As lawmakers gather to address budget priorities, several significant tax policy changes are poised to reshape the state’s economic landscape. Recent legislation enacted in 2025 introduces new corporate incentives, expands sales and use tax exemptions for large-scale data centers, and modernizes Arkansas’ corporate income tax sourcing and nexus standards. Together, these measures signal a continued emphasis on economic development, competitiveness, and alignment with broader national tax trends.

As discussed in our last newsletter, Colorado was the first state to call a special session to address the effects of the One Big Beautiful Bill Act (“OBBBA”). Since then, many states have either passed legislation or issued guidance to address its conformity to H.R. 1, the OBBBA.

Delaware called a special session on October 31, 2025, to address a potential multi-year revenue loss from rolling conformity to federal tax cuts under the OBBBA. On November 19, 2025, Governor Matt Meyer signed H.B. 255 to decouple from certain corporate tax provisions in the OBBBA. Specifically, the bill decoupled from the following: (1) expensing for domestic research and experimental expenditures made after December 31, 2021, but on or before December 31, 2024, to continue expensing in effect immediately before enactment of the OBBBA; (2) for property acquired and placed in service after January 19, 2024, and before January 1, 2031, to continue amortization and depreciation under the IRC in effect immediately before the enactment of the OBBBA; and (3) for qualified production property placed in service before January 1, 2031, to continue amortization and depreciation under the IRC in effect immediately before the enactment of the OBBBA.

In our last several updates, we highlighted the growing pressure on state and local governments as taxpayers increasingly question rising property tax burdens driven by elevated valuations, expanding local budgets, and persistent inflationary costs.

We also noted that taxpayers have a direct opportunity to influence their assessments through the open roll review and appeal process. With those values now largely finalized for the year, attention has shifted to the other major component of the property tax equation: the millage (tax) rate.

As local taxing bodies complete their budgeting cycle, they must determine what millage rate is necessary to fund operations given the finalized tax base. While factors such as community growth, infrastructure demands, public safety needs, and long-term obligations all influence budget requirements, determining what constitutes a reasonable millage adjustment is often subjective and, too often, insufficiently examined or explained.

With the enactment of Louisiana Revised Statute 47:305.73, the state has taken significant steps to incentivize the development of data centers. The statute provides a state and local sales and use tax exemption for eligible data center equipment, software, and certain construction and development costs.

However, while the exemption provides substantial opportunity, there are still questions regarding the practical application of the statute.

Under R.S. 47:305.73, an “approved data center facility” is defined as a facility located in Louisiana that is certified by Louisiana Economic Development (LED). To qualify, the operator must attest that the project will create a minimum of 50 new direct, permanent jobs and expend at least $200 million in new capital investment in Louisiana between July 1, 2024, and July 1, 2029.