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 A Bill
2 95th General Assembly
3 Regular Session, 2025 HOUSE BILL 1538
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5 By: Representative Ray
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8 For An Act To Be Entitled
9 AN ACT TO AMEND THE LAW CONCERNING THE NET OPERATING
10 LOSS INCOME TAX DEDUCTION; TO INCREASE THE CARRY-
11 FORWARD PERIOD FOR THE NET OPERATING LOSS INCOME TAX
12 DEDUCTION; AND FOR OTHER PURPOSES.
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15 Subtitle
16 TO AMEND THE LAW CONCERNING THE NET
17 OPERATING LOSS INCOME TAX DEDUCTION; AND
18 TO INCREASE THE CARRY-FORWARD PERIOD FOR
19 THE NET OPERATING LOSS INCOME TAX
20 DEDUCTION.
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22 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
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24 SECTION 1. DO NOT CODIFY. Legislative findings.
25 The General Assembly finds that:
26 (1) The state's income tax laws should be amended to modernize
27 and simplify the tax code, increase Arkansas's competitiveness, create jobs,
28 and ensure fairness to all taxpayers;
29 (2) Net operating loss carry-forward provisions promote tax
30 neutrality by reducing tax burdens on businesses with cyclical income streams
31 or exposure to economic downturns, regardless of size or age;
32 (3) Longer net operating loss carry-forward provisions promote
33 longevity and facilitate future growth in start-up businesses, expansion of
34 existing operations, and new facility locations; and
35 (4) Federal net operating losses are carried forward
36 indefinitely up to eighty percent (80%) in one (1) year, and many states
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1 conform to the federal law or provide uncapped twenty-year carry-forward
2 periods, while Arkansas is in the minority with a ten-year carry-forward
3 period.
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5 SECTION 2. Arkansas Code � 15-4-2404(a), concerning the net operating
6 loss deduction carry-forward period for certain steel manufacturers, is
7 amended to read as follows:
8 (a) Taxpayers qualified for the benefits of this subchapter and
9 entitled to a net operating loss deduction as provided in � 26-51-427 may
10 carry forward that deduction to the next-succeeding taxable year following
11 the year of the net operating loss and annually thereafter for a total period
12 of ten (10) twenty (20) years or until the net operating loss has been
13 exhausted, whichever is earlier.
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15 SECTION 3. Arkansas Code � 26-51-427(1)(C)(i), concerning the carry-
16 forward period for the income tax deduction for net operating loss, is
17 amended to read as follows:
18 (C)(i) For net operating losses occurring in taxable years
19 beginning on or after January 1, 2020, the net operating loss may be carried
20 over to the next succeeding taxable year and annually thereafter for the
21 following number of years next succeeding the tax year of the net operating
22 loss or until the net operating loss has been exhausted or absorbed by the
23 taxable income of a succeeding year, whichever is earlier:
24 (a) For net operating losses occurring in the
25 tax year beginning January 1, 2020, a total period of eight (8) years; and
26 (b) For net operating losses occurring in tax
27 years beginning on or after January 1, 2021, a total period of ten (10)
28 years; and
29 (c) For net operating losses occurring in tax
30 years beginning on or after January 1, 2025, a total period of twenty (20)
31 years.
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33 SECTION 4. Arkansas Code � 26-51-427(1)(E)(ii), concerning the carry-
34 forward period for the income tax deduction for net operating loss, is
35 amended to read as follows:
36 (ii) In the case of a qualified medical company, a
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1 net operating loss for any taxable year shall be a net operating loss
2 carryover to each of the fifteen (15) twenty (20) taxable years following the
3 taxable year of the loss.
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5 SECTION 5. Arkansas Code � 26-51-427(1)(E)(iv), concerning the carry-
6 forward period for the income tax deduction for net operating loss, is
7 amended to read as follows:
8 (iv) The net operating loss provisions stated in
9 this subdivision (1)(E), which resulted from the operation of a qualified
10 medical company, are effective for taxable years beginning on and after
11 January 1, 1987 2025;
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13 SECTION 6. Arkansas Code � 26-51-1203(a), concerning the carry-forward
14 period for the net operating loss deduction for certain steel mills, is
15 amended to read as follows:
16 (a) Taxpayers qualified under � 26-51-1202(a) and (b), entitled to a
17 net operating loss deduction as provided in � 26-51-427, may carry forward
18 that deduction to the next succeeding taxable year following the year of the
19 net operating loss and annually thereafter for a total period of ten (10)
20 twenty (20) years or until the net operating loss has been exhausted,
21 whichever is earlier.
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23 SECTION 7. Arkansas Code � 26-51-1213(a), concerning the carry-forward
24 period for the net operating loss deduction for certain steel mills, is
25 amended to read as follows:
26 (a) Taxpayers qualified under � 26-51-1212(2) and entitled to a net
27 operating loss deduction as provided in � 26-51-427 may carry forward that
28 deduction to the next-succeeding taxable year following the year of such net
29 operating loss and annually thereafter for a total period of ten (10) twenty
30 (20) years or until such net operating loss has been exhausted, whichever is
31 earlier.
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33 SECTION 8. Arkansas Code � 26-52-913 is amended to read as follows:
34 26-52-913. Net operating loss deduction -- Carry forward.
35 Taxpayers qualified under � 26-52-912(2) and entitled to a net
36 operating loss deduction as provided in � 26-51-427 may carry forward that
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1 deduction to the next-succeeding taxable year following the year of the net
2 operating loss and annually thereafter for a total period of ten (10) twenty
3 (20) years or until the net operating loss has been exhausted, whichever is
4 earlier. The net operating loss deduction must be carried forward in the
5 order named above.
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7 SECTION 9. EFFECTIVE DATE. Sections 1�8 of this act are effective for
8 tax years beginning on or after January 1, 2025.
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4 02/20/2025 7:07:30 AM JLL216Every fact on this page links to its source, starting with the official bill record.