Arkansas Legislation: Vouchers, Medicaid, and a $6.7B Budget

The Arkansas Legislature’s 2025 regular session ran 94 days and produced more than 1,000 new laws, reshaping school choice, Medicaid, corporate taxes, criminal sentencing, immigration enforcement, ballot initiatives, and bathroom access, with several measures already struck down or rewritten after federal court losses. The 2026 fiscal session followed with a $6.7 billion state budget. What follows walks through what passed, what took effect, and what the courts have done to it.

Education: Vouchers, Classrooms, and a Blocked Ten Commandments Law

The Educational Freedom Account voucher program was the session’s biggest spending story. Act 920 (SB 625) amended the program through an emergency clause,¹ and the 2026 fiscal session appropriated $309 million for it, a $122 million increase over the previous year. The program pays up to $7,208 per student toward private school tuition or homeschooling expenses.²

For public schools, Act 909 raised per-pupil funding to $8,162 for 2025–2026, with $8,037 set for 2026–2027. Act 123 guaranteed every public school student a free daily breakfast regardless of household income, and Act 195 tripled the maximum literacy tutoring grant from $500 to $1,500.³

Act 573 required a Ten Commandments display in every public school classroom and library. In March 2026 U.S. District Judge Timothy Brooks issued a permanent injunction against six school districts, ruling the law violated the Establishment Clause and families’ Free Exercise rights. Governor Sanders and Attorney General Tim Griffin said they would appeal.⁴⁵

Other curriculum changes stand. Act 478 mandates instruction on the moral and religious beliefs of the Founding Fathers. Act 134 requires social studies standards comparing the American constitutional republic to other government forms including communism and autocracy. Act 400, the Religious Rights at Public Schools Act of 2025, clarified religious expression protections for students and staff.³

On school operations, Act 122, the “Bell to Bell, No Cell Act,” restricted personal device use during school hours. Act 229 added age-appropriate firearm safety instruction starting in 2025–2026.⁶ Act 565, the Teacher and Student Protection Act, strengthened school responses to repeatedly violent or abusive behavior. Act 908, called Eli’s Law, requires audio recording devices in locker rooms by the 2027–2028 school year.³ Higher education changed too: Act 341, the ACCESS Act, introduced productivity-based funding and a direct admissions model for Arkansas colleges.⁷

Medicaid Work Requirements and New Insurance Mandates

If you are enrolled in ARHOME, Arkansas’s Medicaid expansion program, the biggest change is coming in two phases. Healthy adults aged 19 to 64 will have to work, volunteer, or attend school at least 80 hours per month. Exemptions cover pregnant and postpartum women, disabled veterans, caregivers, and people with special medical needs. The Department of Human Services began a soft implementation on July 1, 2026, running automated compliance checks without penalties. Full enforcement — including possible benefit suspension after a 30-day compliance window — begins January 1, 2027. About 217,000 Arkansans were enrolled in ARHOME as of February 2026.⁸

The requirement is driven by federal law. The budget reconciliation statute commonly called the “One Big Beautiful Bill” added Section 1902(xx) to the Medicaid Act, requiring every Medicaid-expansion state to implement community engagement rules no later than the first quarter after December 31, 2026, and explicitly barring states from waiving the provisions. Arkansas’s earlier “Pathway to Prosperity” waiver proposal was superseded; ARHOME now incorporates its goals while complying with the federal mandate.⁹

Several 2025 laws also expanded insurance coverage. Act 866 requires insurers to cover birthing center deliveries at the same level as hospital-based deliveries. Act 627 mandates no-copay coverage for outpatient breastfeeding and lactation consultant services under Medicaid, ARKids First, and ARHOME. Act 390 requires no-cost-sharing coverage for lung cancer screenings. Act 860 covers genetic testing for inherited cancer-related gene mutations. Act 628 requires coverage for medically necessary bariatric surgery but explicitly excludes injectable weight-loss medications.¹⁰ Act 124, the Healthy Moms, Healthy Babies Act, addresses maternal health access more broadly.⁷

Corporate Taxes, Credits, and Utility Cost Recovery

The most consequential tax change for multistate businesses is Act 719 (SB 567), signed April 16, 2025. Arkansas is shifting from the cost-of-performance method to market-based sourcing for corporate income tax, meaning service and intangible receipts are sourced to the state where the customer or market is located rather than where the work is performed. The law also sets a $250,000 economic nexus threshold for nonresident corporations with no physical presence in Arkansas. Telecommunications and television providers may elect to continue using the old method through 2035. The changes apply to tax years beginning January 1, 2026, and were scored as revenue-neutral.¹¹

New business incentives include Act 881, an income tax credit for relocating a corporate headquarters to Arkansas; Act 882, credits for modernization, automation, and large capital investments; and Act 1012, sales and use tax exemptions for lithium resource development. Act 373 (SB 307), the Generating Jobs Act, allows utilities to recover new power plant construction costs through gradual annual rate adjustments rather than large post-construction spikes. Act 576 created the Industrial Development Authorities Expansion Act, and Act 944 finalized the privatization of the Arkansas Development Finance Authority.⁷

Workforce measures include Act 740, the Earning Safe Reentry Through Work Act, which redirects existing unemployment insurance funds toward workforce training and establishes a new revenue stream for the state Training Trust Fund projected to generate $8 to $10 million annually. Act 695 creates a State Apprenticeship Agency.⁷

Criminal Justice and Immigration

Act 670, signed in April 2025, is the session’s major criminal justice reform, developed through a Justice Reinvestment Initiative launched in 2023. It creates a centralized evidence-based practices unit within the Department of Corrections, ties supervision officers’ career advancement to use of evidence-based interventions, and requires probation conditions to be tailored to individual risk. It also expands eligibility for community correction center placement by cutting the disqualification period for prior convictions from a lifetime ban to five years, and tells the DOC to maximize available beds.¹²

Act 670 sits alongside a 2023 “truth-in-sentencing” law, the Protect Arkansas Act (Act 659 / SB 495), which eliminated parole eligibility for certain felonies and raised required time served to 85 percent for others. Consultant projections estimate that law alone will add about 2,900 offenders to the state prison population by 2040. As of December 2025, nearly all state prison facilities were at or above 100 percent capacity, with more than 1,850 inmates waiting in county jails for state prison space. The state is planning a 3,000-bed prison in Franklin County to address the backlog.¹³

On immigration, SB 426, the Defense Against Criminal Illegals Act, passed the Senate 45–5 and the House 73–20 in April 2025. It adds prison time for undocumented migrants convicted of felonies: up to 4 extra years for a Class D felony, up to 10 for a Class A, B, or C felony, and up to 20 for a Class Y felony. It also requires Arkansas law enforcement agencies to participate in the federal 287(g) program with Immigration and Customs Enforcement.¹⁴ A separate bill creating offenses for human smuggling and harboring undocumented immigrants (HB 1655) died in the House Judiciary Committee when the session adjourned.¹⁵

Elections and Ballot Initiatives

Act 829 (HB 1706) prohibits ranked choice voting for any local, state, or federal election in Arkansas and voids any existing local ordinances using it. The ban does not apply to overseas and military voters casting absentee ballots under federal law.¹⁶

A separate suite of laws tightens the citizen-led ballot initiative process. Act 273 (SB 209) allows the Secretary of State to disqualify petition signatures on a preponderance-of-evidence finding that rules were violated. Act 274 (SB 210) requires signers to read or have read to them the full ballot title, with failure making the canvasser liable for a misdemeanor. Act 240 requires canvassers to request photo ID from signers. Act 453 requires paid canvassers to be permanent Arkansas residents, with sponsors fined $2,500 per non-compliant canvasser. Six of the eight laws carried emergency clauses and took effect immediately. The League of Women Voters of Arkansas and Save AR Democracy filed a federal lawsuit on April 21, 2025, challenging all eight laws as violations of the First and Fourteenth Amendments; the case was assigned to Judge Timothy Brooks in the Western District of Arkansas. A separate pending League lawsuit challenges a 2023 law that raised the geographic signature requirement from 15 to 50 of the state’s 75 counties.¹⁷

Social Media Age Verification, Round Two

A federal judge permanently blocked Arkansas’s original Social Media Safety Act (Act 689 of 2023) on March 31, 2025, finding it violated the First Amendment and the Due Process Clause. The legislature responded with Act 900 (SB 611), which lowers the age threshold from under 18 to under 16, narrows the definition of social media so it applies to more platforms, explicitly prohibits algorithmic targeting of minors, and raises the civil penalty from $2,500 to $10,000 per violation. A companion bill, SB 612, passed the Senate Judiciary Committee and would create a private right of action for parents to sue platforms if algorithmic content exposure leads to addiction, eating disorders, self-harm, or suicide in children.¹⁸

Tort Reform on Medical Damages

Act 28 (HB 1204), one of the earliest 2025 bills enacted, restricts recoverable medical damages in personal injury lawsuits to amounts actually paid by or on behalf of the plaintiff, or amounts that remain unpaid and for which the plaintiff or a third party is legally responsible. The law effectively abrogates the longstanding common-law collateral source rule, which had prevented defendants from benefiting when a plaintiff’s medical bills were partially covered by insurance. Defendants may now introduce evidence of insurance payments, and courts may reduce damage awards accordingly. Trial attorneys testified during committee hearings that the law penalizes plaintiffs across a range of civil claims, including sexual abuse cases, and primarily benefits insurers.¹⁹

Transgender Restrictions

Arkansas’s 2021 ban on gender-affirming medical care for minors (Act 626) was reinstated in August 2025 after the Eighth Circuit Court of Appeals ruled for the state in Brandt v. Rutledge. That decision followed a June 2025 U.S. Supreme Court ruling in US v. Skrmetti upholding a similar Tennessee law. Arkansas also remains one of two states that permit private insurers to refuse coverage for gender-affirming care.²⁰²¹

New in 2025, Act 955 (SB 486) requires multi-occupancy restrooms, changing rooms, and sleeping quarters in government buildings, shelters, and correctional facilities to be designated by biological sex. The law creates a private right of action: anyone who encounters a person of the opposite sex in such a space may sue the responsible entity for damages, declaratory relief, and attorney fees. Exemptions cover custodial staff, medical emergencies, law enforcement duties, and Americans with Disabilities Act accommodations.²²

Laws Already Blocked or Struck Down

Beyond the Ten Commandments injunction and the pending ballot-initiative suit, the Arkansas Supreme Court unanimously struck down Act 975 on April 30, 2026. That law had stripped circuit courts of authority to hear challenges to the constitutionality of state laws, sending those cases directly to the Court of Appeals. Writing for the court, Justice Cody Hiland held that the law violated Amendment 80 of the Arkansas Constitution, which establishes circuit court jurisdiction, noting that the state’s founders “fixed the jurisdiction of our courts in the constitution itself, with limited room for the General Assembly to tinker with that configuration.”²³

The 2026 Fiscal Session and $6.7 Billion Budget

The fiscal session ran April 8 to April 29, 2026, and produced a $6.7 billion Revenue Stabilization Act for the fiscal year beginning July 1. The House approved it 70–27 and the Senate 32–2, and Governor Sanders signed it the day the session adjourned. Budget priorities included the $309 million voucher appropriation, increased funding for the Arkansas State Police and the Department of Corrections, and one-time surplus allocations for Medicaid sustainability and state vehicle purchases. The budget authorized a transfer of up to $300 million in surplus funds to an economic development incentive fund aimed at attracting an advanced manufacturing project to West Memphis.² Total spending growth was held to $211 million over the previous year.²⁴ A proposed constitutional amendment, SJR 15, was referred to the November 2026 ballot and would authorize creation of economic development districts with bonding and incentive authority.⁷

1
Arkansas Legislature. SB625 Bill Detail
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Arkansas Advocate. Arkansas Lawmakers Give $6.7B Budget Final OK, Adjourn Session
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Arkansas House of Representatives. 2025 Education Legislation
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KARK. Federal Court Tosses Arkansas Ten Commandments in Classroom Law as Unconstitutional
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ACLU. Court Permanently Blocks Arkansas Law Requiring Ten Commandments in Every Public School Classroom and Library
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Arkansas Legislature. HB1117 Bill Detail
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Arkansas State Chamber. 2025 Legislative Summary
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Arkansas Department of Human Services. DHS to Launch Soft Implementation of Work and Community Engagement Requirement Starting July 1
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Georgetown University Center for Children and Families. How the OBB Changed the Landscape for Medicaid Work Requirements
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Arkansas Center for Health Improvement. State, Federal Health Policy Changes Set to Take Effect in 2026
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Arkansas Legislature. SB567 Fiscal Impact Statement
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CSG Justice Center. New Arkansas Law Tackles Crime, Recidivism
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Arkansas Advocate. Protect Arkansas Act to Drive Continued Prison Population Growth for at Least a Decade
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Arkansas Advocate. Bill Adding Harsher Penalties to Felonies Committed by Undocumented Migrants Passes Arkansas House
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Arkansas Legislature. HB1655 Bill Detail
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Arkansas Legislature. Act 829 Full Text
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Arkansas Advocate. Federal Lawsuit Challenges Arkansas Restrictions on Citizen-Led Ballot Initiatives
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Arkansas Advocate. Arkansas Senate Approves Proposed Changes to Blocked Social Media Age Verification Law
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Arkansas Advocate. Proposed Tort Reform Advances Out of Arkansas Legislative Committee
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ACLU. Eighth Circuit Upholds Arkansas’s Ban on Gender-Affirming Care for Transgender Youth
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Arkansas Advocate. Transgender Arkansans and Their Families Weigh Moving or Staying in the Face of Restrictions
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Arkansas Legislature. Act 955 Full Text
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Arkansas Advocate. Arkansas Supreme Court Strikes Law Changing How Constitutional Challenges Handled
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Arkansas House of Representatives. Daily Summary for Wednesday, April 29, 2026