An act TO CREATE THE FREE MARKET ZONES ACT, the official text

Stricken language would be deleted from and underlined language would be added to present law.

1 State of Arkansas        As Engrossed: H3/10/25
2 95th General Assembly
                                 A Bill

3 Regular Session, 2025                                            HOUSE BILL 1216

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5 By: Representative Long

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8                          For An Act To Be Entitled

9         AN ACT TO CREATE THE FREE MARKET ZONES ACT; TO

10        PROVIDE TAX INCENTIVES FOR BUSINESS ENTITIES LOCATED

11        IN AN OPPORTUNITY ZONE; TO EXEMPT A BUSINESS LOCATED

12        IN AN OPPORTUNITY ZONE FROM THE INCOME TAX, THE

13        CORPORATE FRANCHISE TAX, AND THE ELECTIVE PASS-

14        THROUGH ENTITY TAX; AND FOR OTHER PURPOSES.

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17                         Subtitle

18                       TO CREATE THE FREE MARKET ZONES ACT; AND

19                       TO EXEMPT A BUSINESS LOCATED IN AN

20                       OPPORTUNITY ZONE FROM THE INCOME TAX,

21                       THE CORPORATE FRANCHISE TAX, AND THE

22                       ELECTIVE PASS-THROUGH ENTITY TAX.

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24 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:

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26        SECTION 1. DO NOT CODIFY. Title.

27        This act shall be known and may be cited as the "Free Market Zones

28 Act".

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30        SECTION 2. Arkansas Code Title 26, Chapter 51, Subchapter 3, is

31 amended to add an additional section to read as follows:

32        26-51-317. Business located in opportunity zone -- Definition.

33        (a) As used in this section, "opportunity zone" means a population

34 census tract located in Arkansas that is designated as a qualified

35 opportunity zone under 26 U.S.C. � 1400Z-1, as of January 1, 2019.

36        (b) There is allowed an exemption from the income tax imposed by this

    *JLL100*                                                       03-10-2025 11:14:59 JLL100
    As Engrossed: H3/10/25                                                  HB1216

1 chapter for a business entity that:

2               (1) Locates in an opportunity zone on or after the effective

3 date of this act; and

4               (2) Is required to file a corporate income tax return under this

5 chapter.

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7   SECTION 3. Arkansas Code � 26-51-460 is repealed.

8   26-51-460. Opportunity zones -- Definition.

9   (a) Except as provided in subsection (b) of this section, 26 U.S.C. �

10 1400Z-2, as in effect on January 1, 2018, regarding opportunity zones, is

11 adopted for the purpose of computing Arkansas income tax liability.

12  (b) As used in this section and for purposes of the adoption of 26

13 U.S.C. � 1400Z-2, "opportunity zone" means a population census tract located

14 in Arkansas that is designated as a qualified opportunity zone under 26

15 U.S.C. � 1400Z-1, as of January 1, 2019.

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17  SECTION 4. Arkansas Code � 26-54-102(b), concerning the entities that

18 are not included in the definition of "corporation" under the Arkansas

19 Corporate Franchise Tax Act of 1979, is amended to add an additional

20 subdivision to read as follows:

21              (4) A business entity that:

22              (A) Locates in an opportunity zone, as defined in � 26-51-

23 317, on or after the effective date of this act; and

24              (B) Is required to file a:

25                          (i) Corporate income tax return under the Income Tax

26 Act of 1929, � 26-51-101 et seq.; or

27                          (ii) Tax return under the Elective Pass-Through

28 Entity Tax Act, � 26-65-101 et seq.

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30  SECTION 5. Arkansas Code Title 26, Chapter 65, Subchapter 1, is

31 amended to add an additional section to read as follows:

32  26-65-109. Exemption for business located in opportunity zone --

33 Definition.

34  (a) As used in this section, "opportunity zone" means a population

35 census tract located in Arkansas that is designated as a qualified

36 opportunity zone under 26 U.S.C. � 1400Z-1, as of January 1, 2019.

                                        2        03-10-2025 11:14:59 JLL100
    As Engrossed: H3/10/25                                HB1216

1   (b) There is allowed an exemption from the tax imposed by this chapter

2 for a business entity that:

3   (1) Locates in an opportunity zone on or after the effective

4 date of this act; and

5   (2) Is subject to the tax levied under this chapter.

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7   SECTION 6. EFFECTIVE DATE. Sections 1-5 of this act are effective for

8 tax years beginning on or after January 1, 2025.

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10                             /s/Long

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