Shown verbatim: the complete text as captured from the official PDF posted by the Arkansas General Assembly, fetched 2026-07-23. Page and line markers are part of the official record; nothing is edited or removed. The official bill page.
Stricken language would be deleted from and underlined language would be added to present law.
1 State of Arkansas As Engrossed: H3/13/25
2 95th General Assembly
A Bill
3 Regular Session, 2025 HOUSE BILL 1116
4
5 By: Representatives Ray, R. Burkes, Eaton, Lundstrum, McClure, Rye
6 By: Senator J. Dismang
7
8 For An Act To Be Entitled
9 AN ACT TO CREATE THE REMOTE AND MOBILE WORK
10 MODERNIZATION AND COMPETITIVENESS ACT; TO AMEND THE
11 INCOME TAX LAWS APPLICABLE TO NONRESIDENTS; TO AMEND
12 THE INCOME TAX AND INCOME TAX WITHHOLDING LAWS
13 APPLICABLE TO CERTAIN REMOTE AND MOBILE EMPLOYEES; TO
14 EXEMPT CERTAIN REMOTE AND MOBILE EMPLOYEES FROM THE
15 INCOME TAX LEVIED ON INDIVIDUALS; TO EXEMPT EMPLOYERS
16 FROM THE REQUIREMENT TO WITHHOLD INCOME TAX FROM THE
17 WAGES OF CERTAIN REMOTE AND MOBILE EMPLOYEES; TO
18 PROVIDE THAT EMPLOYERS ARE NOT LIABLE FOR FAILING TO
19 WITHHOLD INCOME TAX FROM THE WAGES OF CERTAIN REMOTE
20 AND MOBILE EMPLOYEES IN CERTAIN CIRCUMSTANCES; TO
21 AUTHORIZE THE DEPARTMENT OF FINANCE AND
22 ADMINISTRATION TO ENTER INTO RECIPROCITY AGREEMENTS
23 WITH OTHER STATES REGARDING THE IMPOSITION OF INCOME
24 TAX ON CERTAIN NONRESIDENT INDIVIDUALS; AND FOR OTHER
25 PURPOSES.
26
27
28 Subtitle
29 TO CREATE THE REMOTE AND MOBILE WORK
30 MODERNIZATION AND COMPETITIVENESS ACT;
31 AND TO PROVIDE INCOME TAX AND
32 WITHHOLDING EXEMPTIONS RELATED TO
33 CERTAIN REMOTE AND MOBILE EMPLOYEES AND
34 NONRESIDENTS.
35
36 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
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As Engrossed: H3/13/25 HB1116
1
2 SECTION 1. DO NOT CODIFY. Title.
3 This act shall be known and may be cited as the "Remote and Mobile Work
4 Modernization and Competitiveness Act".
5
6 SECTION 2. DO NOT CODIFY. Legislative findings.
7 The General Assembly finds that:
8 (1) Remote and hybrid work is a fast-growing trend in the United
9 States;
10 (2) Surveys have found that thirteen percent (13%) of employees
11 in the United States work from home, and twenty-eight percent (28%) work a
12 hybrid model;
13 (3) Arkansas's tax code has been found to be ranked forty-fifth
14 out of the fifty (50) states because of its complicated and burdensome filing
15 and withholding requirements;
16 (4) Remote and mobile work can be an opportunity to states
17 willing to make their tax codes hospitable and convenient to remote and
18 mobile workers; and
19 (5) While the state has an understandable desire to collect
20 taxes owed by individuals who spend significant time working in the state,
21 there is no compelling reason to place an outsized burden on those briefly
22 passing through the state, particularly those who have no income tax
23 liability.
24
25 SECTION 3. Arkansas Code � 26-51-202, concerning the application of
26 income tax laws to nonresidents, is amended to add an additional subsection
27 to read as follows:
28 (f)(1) The Department of Finance and Administration may enter into a
29 reciprocity agreement with another state to exempt residents of the other
30 state who earn income in this state from the tax levied under this chapter if
31 the other state has a provision in its tax laws that provides an income tax
32 exemption to Arkansas residents.
33 (2) The department shall not enter into a reciprocity agreement
34 under subdivision (f)(1) of this section unless the reciprocity agreement has
35 been reviewed and approved by the Legislative Council.
36
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As Engrossed: H3/13/25 HB1116
1 SECTION 4. Arkansas Code Title 26, Chapter 51, Subchapter 3, is
2 amended to add an additional section to read as follows:
3 26-51-317. Remote and mobile employees.
4 There is allowed an exemption from the income tax imposed by this
5 chapter for income received by an individual as compensation for employment
6 duties performed by the individual while he or she was present in the state
7 if:
8 (1) The total aggregate amount of income received by the
9 individual for employment duties performed while the individual was present
10 in the state is two thousand five hundred dollars ($2,500) or less for the
11 tax year; and
12 (2) The individual performed employment duties for an employer
13 in more than one (1) state during the tax year.
14
15 SECTION 5. Arkansas Code � 26-51-905 is amended to read as follows:
16 26-51-905. Withholding of tax.
17 (a)(1) Every Except as otherwise provided in this section, an employer
18 making payments of wages to employees shall deduct and withhold from the
19 employees' wages an amount determined from withholding tables promulgated by
20 the Secretary of the Department of Finance and Administration and furnished
21 to the employer.
22 (2) The full amount deducted and withheld from any an employee's
23 wages during the income year shall be credited against the tax liability of
24 the employee under the Income Tax Act of 1929, � 26-51-101 et seq., for that
25 year.
26 (b)(1) Notwithstanding the provisions of subsection (a) of this
27 section, every an employer who withholds less than one thousand dollars
28 ($1,000) for a full year's withholding shall report and remit annually on a
29 date specified by the secretary any amounts so withheld by the employer.
30 (2) An employer shall be advised by the secretary of the
31 employer's classification and shall report as classified until such time as
32 the employer advises the secretary in writing that the employer no longer has
33 employees or the employer is closing the business.
34 (3) However, it shall be the duty of the employer to report to
35 the secretary at the end of each income year all wages paid to any such
36 employees on the same forms provided in this subchapter for making employer
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As Engrossed: H3/13/25 HB1116
1 annual withholding statements in order that the secretary may determine the
2 tax liability, if any, of those employees during that income year.
3 (c)(1) An employer is not required to deduct and withhold from an
4 employee's wages the amount determined from the withholding tables
5 promulgated by the secretary and furnished to the employer if:
6 (A) The employee performed employment duties while the
7 employee was present in the state for fifteen (15) or fewer calendar days
8 during the tax year;
9 (B) The employee performed employment duties for the
10 employer in more than one (1) state during the tax year; and
11 (C) The employee is not being paid for employment duties
12 performed in the employee's capacity as:
13 (i) An athlete who receives wages for performing
14 services in a professional athletic event;
15 (ii) An entertainer who receives wages on a per-
16 event basis for performing services in the professional performing arts; or
17 (iii) A public figure who receives wages on a per-
18 event basis for performing services at discrete events, including without
19 limitation speeches, public appearances, and similar events.
20 (2) If an employee performs employment duties for an employer
21 while the employee was present in the state for more than fifteen (15)
22 calendar days during the tax year, the employer shall withhold and remit
23 taxes for every day the employee performed employment duties while present in
24 this state during the tax year, including the first fifteen (15) days in
25 which the employee performed employment duties in this state.
26 (3)(A) For purposes of this subsection, an employee is
27 considered present and performing employment duties in this state for a day
28 if the employee performs more of the employee's employment duties in this
29 state than in any other state during that day.
30 (B) A portion of a day during which an employee is in
31 transit shall not be considered in determining the location of the employee's
32 performance of employment duties.
33
34 SECTION 6. Arkansas Code � 26-51-916 is amended to read as follows:
35 26-51-916. Employer liable for amounts required to be withheld --
36 Exceptions -- Definition.
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1 (a) As used in this section, "time and attendance system" means a
2 system:
3 (1) Through which an employee is required to record the
4 employee's work location for every day worked outside the state where the
5 employee's employment duties are primarily performed; and
6 (2) That is designed to allow an employer to allocate an
7 employee's wages for income tax purposes among all states in which the
8 employee performs employment duties for the employer.
9 (b)(1) Every Except as otherwise provided in this section, an employer
10 shall be liable for amounts required to be deducted and withheld by this
11 subchapter regardless of whether or not the amounts were in fact deducted and
12 withheld.
13 (2) However, if the employer fails to deduct and withhold the
14 required amounts and if the tax against which the required amounts would have
15 been credited is paid, the employer shall not be liable for those amounts not
16 deducted and withheld if the failure was due to reasonable cause.
17 (c) An employer is not liable for any penalties or interest otherwise
18 applicable for failing to deduct and withhold the amount required under this
19 subchapter from the wages of an employee who performed employment duties for
20 the employer in more than one (1) state if the employer:
21 (1) Maintains a time and attendance system specifically designed
22 to allocate employee wages for income tax purposes among all taxing
23 jurisdictions in which the employee performs employment duties for the
24 employer and relies on data from the time and attendance system in making its
25 determination regarding whether withholding is required; or
26 (2) Does not maintain a time and attendance system and relies on
27 one (1) or more of the following in making its determination regarding
28 whether withholding is required:
29 (A) The employer's own records, maintained in the regular
30 course of business, concerning the employee's location while performing his
31 or her employment duties;
32 (B) The employee's reasonable determination of the time
33 the employee expected to spend performing employment duties in the state, if
34 the employer did not:
35 (i) Have actual knowledge of fraud on the part of
36 the employee in making the determination; or
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As Engrossed: H3/13/25 HB1116
1 (ii) Conspire with the employee to evade taxation in
2 making the determination;
3 (C) Travel records;
4 (D) Travel expense reimbursement records; or
5 (E) A signed, written statement from the employee of the
6 time spent performing employment duties for the employer in the state during
7 the tax year.
8
9 SECTION 7. DO NOT CODIFY. Severability.
10 The provisions of this act are severable, and the invalidity of any
11 provision of this act shall not affect other provisions of this act that can
12 be given effect without the invalid provision.
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14 SECTION 8. EFFECTIVE DATE. Sections 1-6 of this act are effective for
15 tax years beginning on or after January 1, 2026.
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6 03-13-2025 09:45:21 JLL076Every fact on this page links to its source, starting with the official bill record.