New Arkansas laws that affect your finances
As we close out 2021, it’s important to look to the future of your business and personal finances to decide what changes you might want to make in the new year. It’s also important to know what changes have been made by the government that affects you. Here are several new Arkansas laws that could affect your business.
Act 154 - Supplemental Unemployment Benefits
Did you receive federal unemployment benefits in 2020 or 2021? Usually, you would owe state income tax on that income. According to Act 154, you will not have to pay any Arkansas state income tax on those benefits when you file in 2022.
Act 248 - Paycheck Protection Program
Did you receive any Paycheck Protection Program (PPP) funds or certain other COVID-19 federal relief loans for your business? According to Act 248, this money is also exempt from state income tax. This affects more than 42,000 Arkansas businesses that received PPP loans in 2020 and 2021.
Act 586 - Independent Tax Appeals Commission
This next law may not sound like it affects you, but if you ever want to appeal your Arkansas tax bill, this is a positive development. Act 586 creates an independent tax appeals commission. Previously, if an Arkansas taxpayer wanted to dispute anything on their tax return, they had to file a complaint with the Department of Finance and Administration. Then, DFA would be the judge as to whether or not the complaint was valid. This act establishes an independent tax commission made up of three professionals - a lawyer, a CPA, and a third person who is both a lawyer AND a CPA. Act 586 for the independent appeals commission begins Jan 1, 2023.
Act 362 - Entity-level Arkansas Tax Option
This next law goes into effect for tax years starting January 1, 2022 and affects businesses organized as an S-Corporation or partnership. The Act gives owners of these businesses the option of paying state income tax at the corporate (entity) level, which would be fully deductible from federal income tax. This could be huge savings for those businesses! This will easily affect many of my clients. If you are interested in paying income tax on your business income at the entity level, rather than adding it in with your personal taxes, contact me or your tax preparer and we can help you figure out if this is to your advantage.
I look forward to 2022 and hope you have a happy and safe new year!