Freight charges are taxable in Arkansas whenever the goods being shipped are taxable. The state folds delivery, shipping, transportation, and handling into the sale price, so those charges get taxed at the same combined rate as the product itself. Arkansas’s state rate is 6.5%, with local city and county taxes layered on top based on where the shipment is delivered.1Arkansas Department of Finance and Administration. Sales and Use Tax FAQs The one meaningful way out is a common carrier that bills the buyer directly for shipping.
The General Rule
Arkansas defines “gross receipts” to include the total consideration for a sale with no deduction for delivery charges.2Justia. Arkansas Code 26-52-103 – Definitions If you sell a taxable item and charge the buyer for shipping, that shipping charge is part of the taxable sale. It does not matter whether the freight shows up as a separate line on the invoice or gets buried in the product price. Either way, it’s taxable.
A lot of sellers assume that pulling freight out onto its own line makes it exempt. It does not. Arkansas law does allow separately stated installation charges to be excluded from gross receipts, but there is no equivalent carve-out for delivery or freight.2Justia. Arkansas Code 26-52-103 – Definitions Line-item separation is good invoicing practice; it is not a tax strategy.
When Freight Is Not Taxable
Two situations take the sales tax off the shipping charge.
The first is the common carrier exception. If a third-party carrier (UPS, FedEx, a trucking company) sends its invoice directly to the buyer rather than running the cost through the seller, the carrier’s freight charge is not subject to sales tax.1Arkansas Department of Finance and Administration. Sales and Use Tax FAQs The deciding factor is who issues the bill. Seller arranges shipping and passes the cost through on its own invoice: taxable. Carrier bills the buyer separately: not taxable.
The second is simpler. When the goods themselves are exempt from sales tax, the freight to deliver them is also exempt. Items sold under a valid resale certificate are the common example: the merchandise is exempt, so the delivery charge rides along as exempt too. The same reasoning covers any other exempt category.
Mixed Shipments
A single shipment with both taxable and exempt items only owes tax on the portion of the delivery charge tied to the taxable goods. You can allocate by sales price or by weight, comparing the taxable items to the total shipment. Pick one method and stick with it, because an auditor will want to see consistent documentation.
Handling, Packing, and Preparation Charges
Handling, crating, packing, and preparation-for-mailing charges get the same treatment as shipping. All of them fall inside the sales price under Arkansas Code 26-52-103.2Justia. Arkansas Code 26-52-103 – Definitions A “handling fee” on a taxable sale is taxable. Splitting a shipping-and-handling charge into two line items does not help.
Grocery Deliveries After January 1, 2026
Arkansas removed its last state-level sales tax on food and food ingredients effective January 1, 2026. Act 1008 eliminated the final 0.125% that had funded conservation.3Arkansas Department of Finance and Administration. State Sales and Use Tax Rate Changes Because freight follows the goods, state sales tax no longer applies to delivery charges on grocery shipments either.
Local taxes are a different matter. Cities and counties can still tax groceries, and where they do, that local tax applies to the delivery charge as well. If you’re delivering groceries into a jurisdiction with a local tax on food, collect that local tax on both the food and the fee to bring it to the door.
Which Local Rate Applies
Arkansas uses destination-based sourcing. When the buyer doesn’t take possession at the seller’s location, the local tax rate is the one at the delivery address, not the shipping origin.1Arkansas Department of Finance and Administration. Sales and Use Tax FAQs That rate governs both the goods and the freight on the same invoice.
For sellers who ship into many Arkansas cities and counties, that means looking up the correct combined rate for each destination. The DFA publishes rate lookup tools on its website. Using the wrong local rate is one of the most common compliance mistakes, especially for operations shipping to dozens of zip codes a month.
If You’re an Out-of-State Seller
Remote sellers and marketplace facilitators must collect Arkansas sales tax once their sales into the state exceed $100,000 or 200 transactions in the current or previous calendar year.4Justia. Arkansas Code 26-52-111 – Remote Sellers and Marketplace Facilitators Once you’re over either threshold, the freight rules apply to you exactly as they do to an Arkansas-based business. Shipping charges on taxable goods going to Arkansas addresses are taxable.
If you sell through a marketplace facilitator like Amazon or Etsy, the facilitator is generally the one collecting and remitting the tax, freight included. Marketplace sales count toward the facilitator’s threshold, not yours.4Justia. Arkansas Code 26-52-111 – Remote Sellers and Marketplace Facilitators Direct sales through your own website are a separate bucket that counts toward your own threshold.
What It Costs to Get This Wrong
Arkansas charges a 5% failure-to-file penalty for each month or partial month a return is late, capped at 35%. A separate failure-to-pay penalty also runs at 5% per month up to 35%, but the state will not stack both on the same liability. Only one applies.5Arkansas Department of Finance and Administration. Penalty and Interest Charges Interest accrues at 10% per year on the unpaid balance from the original due date.
Those penalties apply to the full amount of tax that should have been collected, freight included. A seller who has been shipping taxable goods for several years without taxing the delivery charges can face substantial back-tax liability, and the penalties and interest add up quickly on top of it.
Records to Keep
Clean records are what let you actually use the exceptions above. If you rely on the common carrier exception, keep documentation showing the carrier billed the buyer directly. For mixed shipments, keep the allocation worksheets that show how you split delivery charges between taxable and exempt items, using either price or weight consistently.
For sales under a resale certificate, keep the certificate on file. Arkansas requires a valid exemption certificate from the buyer to justify not collecting tax on the sale and its freight. Without one, the DFA can hold you liable for the uncollected tax if the buyer turns out not to qualify.