The Arkansas farm tax exemption lets eligible commercial farmers buy qualifying equipment, inputs, and utilities without paying the state’s 6.5% sales tax.1Arkansas Department of Finance and Administration. State Sales and Use Tax Rates Since January 2026, the simplest way to claim it is the Farmer Sales Tax Identification Card, a wallet-sized card you show the retailer instead of filling out paperwork at every purchase.2Arkansas Department of Finance and Administration. Farmers Sales Tax Exemption Card Now Available The card costs $20 for a new application, and wrongfully claiming the exemption is a misdemeanor that also triggers back taxes, interest, and civil penalties on audit.
Who Qualifies as an Eligible Farmer
Arkansas defines an eligible farmer as a person or entity engaged in farming with the resources and capacity to produce food, fiber, grass sod, or nursery products in commercially marketable quantities.3Arkansas Legislature. House Bill 1594 – Act 621 Commercially marketable is the phrase that does the work. A backyard garden or a small flock of hens kept for personal eggs will not meet the standard. The exemption is for operations that produce goods for the marketplace.
To prove eligibility, you submit copies of your federal income tax forms reporting farm income or loss for the most recent three-year period. That is typically Schedule F (Form 1040) for sole proprietors or Form 1065 for partnerships.2Arkansas Department of Finance and Administration. Farmers Sales Tax Exemption Card Now Available If you have been farming for fewer than three years, you can submit a three-year business plan on the DFA’s form instead. The plan has to show you have acquired the land, financing, and other resources needed to produce in commercial quantities.3Arkansas Legislature. House Bill 1594 – Act 621
How to Get the Farmer Sales Tax Identification Card
Act 621 of 2025 created the card, and it became available in January 2026.2Arkansas Department of Finance and Administration. Farmers Sales Tax Exemption Card Now Available You apply online through the Arkansas Taxpayer Access Point at atap.arkansas.gov. Once the DFA approves the application, the card is mailed to you.
The fee is $20 for a new card and $10 to renew. Each card is valid for eight years.3Arkansas Legislature. House Bill 1594 – Act 621 At checkout, you hand the card to the retailer, who records your information to document the nontaxable sale. A retailer who accepts the card in good faith is relieved of sales tax liability on that transaction.
If You Don’t Want the Card
The card is optional. If you farm in Arkansas but don’t file Arkansas income taxes, or you would rather keep using paperwork, you can still claim the exemption by giving the retailer a completed Commercial Farming Sales Tax Exemption form (ST-403) or a general Exemption Certificate (ST-391) at the time of purchase.4Arkansas Department of Finance and Administration. Commercial Farmer Sales Tax Exemption The card replaces that paperwork; it doesn’t replace the underlying exemption.
What Purchases Are Exempt
The rule that runs through everything: the item has to be used exclusively and directly in the commercial production of food or fiber, or of grass sod or nursery products. If that test is met, the state’s 6.5% gross receipts tax comes off the sale.
Farm Equipment and Machinery
New and used farm equipment and machinery used exclusively and directly in farming are exempt.5Justia. Arkansas Code 26-52-403 – Farm Equipment and Machinery – Definitions Tractors, combines, planters, irrigation systems, and harvesting implements are the obvious examples. The statute specifically includes irrigation pipe whether it runs above ground or is buried.
Several categories are carved out:
- Motor vehicles subject to highway registration, even if you drive them only on the farm.
- Airplanes and hand tools.
- Repair and replacement parts, and repair labor, even on equipment whose original purchase was exempt.6Arkansas Department of Finance and Administration. Commercial Farming Sales Tax Exemption Certificate
- Items incorporated into real property, such as building materials for barns, poultry houses, and fencing.
The repair parts rule catches many farmers off guard. Buying the combine is tax-free. The replacement belt or hydraulic cylinder two years later is not. Inside a poultry house, the operational equipment (heaters, feeding systems, fans, generators) can qualify as farm equipment, but the lumber and steel that make up the house itself are taxable.
Seeds, Chemicals, and Feed
Seeds, fertilizers, herbicides, pesticides, and other agricultural chemicals used in commercial production are exempt.7Arkansas Economic Development Commission. Sales and Use Tax Feed and medicines for livestock or poultry qualify as long as the animals are being raised for commercial sale, with the end product sold in processed form or at retail. Feeding animals kept for personal use does not count.
Electricity and Natural Gas
Electricity and natural gas used directly in farming are exempt. Heating a poultry house or powering an irrigation pump qualifies. Running the air conditioner in your farmhouse does not. When a single utility line serves both farm and personal use, only the commercial-production portion is exempt, so usage records matter.
ATVs and UTVs
All-terrain vehicles can qualify, but they face extra scrutiny. Arkansas defines an exempt ATV as a vehicle with three, four, or six wheels, no more than 50 inches wide, on nonhighway tires, with an engine no larger than 1,000 cc.5Justia. Arkansas Code 26-52-403 – Farm Equipment and Machinery – Definitions Golf carts, riding lawnmowers, and garden tractors are outside the definition no matter how they are used.
To buy an ATV tax-free, you complete DFA form ET-819 certifying the vehicle will be used exclusively and directly in commercial food or fiber production.8Arkansas Department of Finance and Administration. Commercial Farm Exemption for All-Terrain Vehicles The seller sends the form to the DFA with the sales tax return for the month of the sale. Accessories that weren’t preassembled by the manufacturer are taxable even when bought at the same time. Recreational riding or personal errands put the exemption at risk if the DFA audits you later.
Off-Road Diesel and Fuel Tax Refunds
Diesel used in off-road farm equipment can be bought tax-free if you follow the process. Arkansas exempts sales of dyed distillate special fuel when it’s delivered into storage tanks clearly marked “NOT FOR MOTOR VEHICLE USE.”9Justia. Arkansas Code 26-56-201 – Imposition of Tax – Exemptions Before you can start buying that way, you need an off-road consumer license from the DFA.
If you’ve already paid state motor fuel tax on clear diesel used in off-road farm equipment, you may claim a refund or carry the credit forward against future tax for up to eight quarters.10Arkansas Department of Finance and Administration. Special Motor Fuels Tax Law Detailed records are required to substantiate each claim.
Sales You Make That Are Tax-Free
Some of what you sell is exempt too. Arkansas exempts sales of raw agricultural products, including Christmas trees, when the producer sells directly to the consumer at the farm, orchard, or garden where they were grown, or at a farmers’ market.11Justia. Arkansas Code 26-52-401 – Various Products and Services – Definitions The producer has to make the sale; a reseller or middleman doesn’t get the exemption.
Wholesale sales to businesses that resell your products are also exempt from gross receipts tax, provided the buyer holds a valid sales tax permit and is regularly engaged in reselling.11Justia. Arkansas Code 26-52-401 – Various Products and Services – Definitions If you sell to a processor or retailer, collect and keep their permit information so you can document the resale exemption later.
Penalties for Misusing the Exemption
Wrongfully claiming the exemption is a misdemeanor. That applies both to a buyer who isn’t actually engaged in commercial farming and to a seller who fails to reduce the contract price by the full tax amount.6Arkansas Department of Finance and Administration. Commercial Farming Sales Tax Exemption Certificate On audit, the DFA assesses the unpaid tax with interest and additional civil penalties.
Sellers must keep exemption certificates and Farm Card transaction records for six years from the date of sale. Keep your own copies too. Receipts that show the exempt items and how they are used in the operation are what defend the purchase if it gets questioned. The burden is on you to prove the sale qualified. The common audit trigger is equipment or an ATV that shows up registered for personal use or spotted off the farm. If you buy something tax-free and later repurpose it for non-farm use, you owe the tax.