Arkansas Sales and Use Tax: Rates, Exemptions, and Filing

Arkansas sales and use tax is a 6.5% state-level tax on most tangible goods, specified digital products, and a defined list of services, with city and county add-ons pushing combined rates as high as roughly 11.5%. The same 6.5% rate applies as a compensating use tax on items bought out of state and brought into Arkansas. As of January 1, 2026, the state portion no longer applies to groceries, though local grocery taxes still do.

State and Local Rates

The statewide rate is 6.5%, published by the Department of Finance and Administration and built from a base excise tax under Ark. Code Ann. § 26-52-301 with additional levies stacked on under § 26-52-302.¹²³

Counties and cities layer their own sales taxes on top. Local add-ons run from 0% up to around 5%, so combined rates across the state fall roughly between 6.5% and 11.5% depending on where the buyer receives the goods. The DFA maintains a downloadable table of every city and county rate.⁴

Which Local Rate Applies

Arkansas uses destination-based sourcing. The local rate is set by where the buyer receives the item, not where the seller is located. Arkansas moved to this “point of delivery” model in 2008. Order furniture from a Fayetteville store and have it shipped to Little Rock, and the Little Rock local rate applies.⁵ A single business selling statewide may collect different totals for different customers.

What’s Taxed

The sales tax applies broadly to tangible personal property — anything you can see, weigh, measure, or touch — and to specified digital products and digital codes.² Software sold on a disc or USB drive is treated as tangible property and taxed; software delivered electronically is generally not taxable when licensing fees are separately stated. Cloud-based software is not explicitly addressed in the statute, and state guidance has treated it as a nontaxable service. Because that treatment can shift, businesses buying or selling software in Arkansas should confirm current guidance with the DFA.

Taxable Services

Repair, installation, cleaning, and refinishing services are taxable across a long list of categories: motor vehicles, boats, appliances, furniture, jewelry, office machines, shoes, bicycles, and more.¹ Janitorial, general cleaning, and pool cleaning services are taxable.⁶ Landscaping is taxable on both residential and commercial property, but lawn care is taxable only on nonresidential property. Mowing a homeowner’s yard is not subject to sales tax; mowing a strip mall’s lawn is.⁷ Short-term lodging — hotels, vacation rentals, and similar accommodations — is taxable.

What’s Exempt

Groceries (State Portion Only, as of 2026)

The Grocery Tax Relief Act (Act 1008) reduced the state grocery rate from 0.125% to zero effective January 1, 2026, eliminating all remaining state sales tax on food and food ingredients.³ Local sales taxes still apply to groceries, so the total at the register depends on your city and county. Prepared food sold by restaurants and delis is not part of this exemption and remains subject to the full 6.5% state rate plus local taxes.

Prescription Drugs

Prescription drugs sold by licensed pharmacists, hospitals, or physicians for human use are exempt from both sales and use tax, along with oxygen prescribed for human use and free distribution of prescription samples.⁸ Over-the-counter medications and general medical equipment are not covered.

Manufacturing Machinery

Machinery and equipment used directly in manufacturing, processing, fabricating, assembling, or packaging goods at Arkansas plants are exempt from use tax. The exemption covers equipment for new facilities, expansions of existing ones, or full replacement of existing machinery, along with pollution-control equipment required by state or federal regulations.⁹ Routine repair parts that don’t replace an entire machine or meaningfully extend its life don’t qualify.

Other Exemptions

Sales by churches and charitable organizations are exempt as long as the organization is not engaged in a for-profit business. Sales to the federal government are exempt. Newspapers, motor fuel on which the state fuel tax has already been paid, and food sold in school cafeterias operated for students and teachers (not the general public) are also excluded.¹⁰

Use Tax on Out-of-State Purchases

The compensating use tax picks up purchases the sales tax misses. If you buy from an out-of-state retailer or online seller that doesn’t collect Arkansas tax, you owe the same 6.5% state rate plus any applicable local rate when the item is brought into the state for use, storage, or consumption.¹¹

For consumers reporting use tax themselves, the DFA assigns a reporting frequency: monthly if you owe more than $100 per month, quarterly for $25 to $100, and annually for less than $25.⁵ Ignoring the obligation lets penalties and interest build up.

Rules for Out-of-State Sellers and Marketplaces

Following South Dakota v. Wayfair in 2018, Arkansas requires out-of-state sellers to collect tax based on economic activity in the state, not just physical presence.

Remote Seller Thresholds

An out-of-state seller must register, collect, and remit Arkansas sales or use tax if, in the current or previous calendar year, aggregate sales of tangible property, taxable services, digital codes, or specified digital products delivered into Arkansas exceeded $100,000 in revenue or 200 transactions. Meeting either trigger is enough.¹² The requirement isn’t retroactive; it kicks in going forward once a threshold is crossed.

Marketplace Facilitators

Platforms like Amazon, eBay, and Etsy that facilitate third-party sales carry the collection responsibility themselves. A sale made through a marketplace facilitator counts toward the facilitator’s threshold, not the individual seller’s. If you sell exclusively through a registered marketplace facilitator, those sales generally won’t push you across the $100,000 or 200-transaction line on your own. The DFA audits facilitators directly for facilitated sales rather than auditing the individual seller for the same transactions. Facilitators get liability relief when a tax error results from incorrect information the seller provided, unless the two are related entities.¹²

Getting a Permit

Any business selling taxable property or services in Arkansas needs a Sales and Use Tax Permit before collecting tax. Registration is handled through the Arkansas Taxpayer Access Point (ATAP).¹³ You’ll need:

A $50 nonrefundable permit fee, paid electronically with the application
A physical location address (no P.O. boxes)
A signed lease agreement if the business property is leased
A bill of sale if you purchased equipment or inventory from a prior business
The date operations begin in Arkansas

Any outstanding tax liabilities with the state must be cleared before a new permit is issued. Processing takes up to two weeks.¹³

Filing and Paying

Registered businesses file through ATAP on a schedule the DFA assigns based on volume: monthly, quarterly, or annually. You report total gross receipts, calculate the tax owed, and pay electronically.

On-Time Filing Discount

Arkansas gives a 2% discount on the tax collected for businesses that file and pay on time, capped at $1,000 per month. The same 2% applies to local sales tax accounts, capped at $1,000 per city and county reported. Local use tax accounts are not eligible.

Penalties and Interest

Filing late when you owe money triggers a failure-to-file penalty of 5% of the unpaid tax per month or partial month, up to 35%. Filing on time but not paying brings a separate 1% failure-to-pay penalty per month, also capped at 35%. The two penalties combined cannot exceed 35%. Interest accrues at 10% per year on unpaid balances.¹⁴

1
Justia. Arkansas Code 26-52-301 – Tax Levied – Definitions
2
FindLaw. Arkansas Code Title 26 Taxation 26-52-302 – Additional Excise Taxes
3
Arkansas Department of Finance and Administration. State Sales and Use Tax Rates
4
Arkansas Department of Finance and Administration. City and County Sales and Use Tax Rates
5
Arkansas Department of Finance and Administration. Sales and Use Tax FAQs
6
Code of Arkansas Rules. 26 CAR 30-506 – Services Subject to Tax – Cleaning
7
Code of Arkansas Rules. 26 CAR 30-504 – Services Subject to Tax – Lawn Care and Landscaping
8
Justia. Arkansas Code 26-52-406 – Prescription Drugs and Oxygen
9
Justia. Arkansas Code 26-53-114 – Exemption for Certain Machinery and Equipment – Definitions
10
Justia. Arkansas Code 26-52-401 – Various Products and Services – Definitions
11
Justia. Arkansas Code 26-53-101 – Title
12
Justia. Arkansas Code 26-52-111 – Remote Sellers and Marketplace Facilitators
13
Arkansas Department of Finance and Administration. Register for a Tax Account
14
Arkansas Department of Finance and Administration. Penalty and Interest Charges