Hot Springs Sales Tax: 9.5% Rate, Hospitality Tax, and Filing

The Hot Springs sales tax is 9.5% on most retail purchases, combining a 6.5% Arkansas state tax, a 1.5% Garland County tax, and a 1.5% City of Hot Springs tax.¹ Restaurants, hotels, and short-term rentals inside city limits collect an additional 3% advertising and promotion tax, pushing the total on prepared food and lodging to 12.5%.

How the 9.5% Rate Is Built

State of Arkansas: 6.5%²
Garland County: 1.5%
City of Hot Springs: 1.5%¹

All three layers apply to the same transaction. At the register you see one combined number; behind the scenes, the state collects everything and distributes the local shares back to the county and city.

What the 9.5% Rate Applies To

The combined rate covers tangible personal property, which is the category most physical goods fall into. It also covers specified digital products, including e-books, streaming audio, streaming video, and digital codes used to access them. Arkansas has taxed those digital goods since 2018.³

A number of services carry the tax too. Repair, cleaning, refinishing, and installation labor on items like motor vehicles, appliances, furniture, boats, jewelry, and office equipment is taxable, as are service contracts, maintenance agreements, and extended warranties on those items. If you pay someone in Hot Springs to fix your dishwasher or detail your car, the labor charge is taxed at 9.5%.

Groceries

As of January 1, 2026, the state sales tax on food and food ingredients dropped to 0% under Act 1008, which eliminated the final 0.125% that remained after nearly two decades of reductions.² The county and city portions still apply, so groceries in Hot Springs carry a 3.0% combined local rate. Prepared food sold at restaurants is not groceries and remains fully taxable at 9.5% (and picks up the 3% hospitality tax on top).

Exemptions Worth Knowing

Prescription drugs and oxygen prescribed by a licensed physician are fully exempt.⁴ Over-the-counter medications are taxed at the standard rate.

Sales by churches and charitable organizations can be exempt, but the rules are narrower than many people assume. The exemption covers sales by the organization, not purchases it makes. If the charitable sale competes with for-profit businesses, the exemption applies only when members of the organization conduct the sale, all proceeds go to the charity, and the event occurs no more than ten times per year.⁵ Nonprofit hospitals and their gift shops receive a broader exemption. Keep documentation for every transaction you claim as exempt.

Online and Out-of-State Purchases

When an online or out-of-state seller doesn’t charge Arkansas sales tax on something you buy for use in Hot Springs, you owe use tax at the same 9.5% rate. Most large retailers now collect it automatically. For purchases where no tax was collected, Arkansas requires individuals to file a Consumer Use Tax Report with the Department of Finance and Administration rather than reporting the amount on a state income tax return.

The 3% Hospitality Tax

Hot Springs charges a separate 3% advertising and promotion tax on prepared food and short-term lodging inside city limits. Restaurants, bars, hotels, motels, and short-term rentals collect it on every qualifying sale.⁶ A hotel guest therefore pays 12.5% in combined tax on the room: the 9.5% sales tax plus the 3% hospitality tax.

A seven-member Advertising and Promotion Commission administers the funds, which support tourism promotion along with the Convention Center and Downtown Visitors Center. This tax is reported and paid separately from regular sales tax, through the commission’s own system.⁶

If You Collect Sales Tax: Permit, Filing, and Penalties

Any business selling taxable goods or services in Hot Springs needs an Arkansas sales tax permit before opening. Registration runs through the Arkansas Taxpayer Access Point (ATAP), which also handles ongoing filings and payments. The permit fee is $50, paid electronically with the application.⁷

Expect to provide a physical business address (no P.O. boxes), a start date, a lease if you rent the space, and a bill of sale if you bought inventory or equipment from a prior business. Any outstanding state tax liabilities must be cleared before a new permit will issue. Allow about two weeks for processing.⁷

When Returns Are Due

Sales tax returns are due by the 20th of the month following the reporting period. Most businesses file monthly, so the January return is due February 20, February is due March 20, and so on. If the 20th lands on a weekend or holiday, the deadline moves to the next business day.⁸ Lower-volume businesses may qualify for quarterly or annual filing.

The 2% Timely-Filing Discount

File on time and Arkansas lets you keep 2% of the tax collected, capped at $1,000 per month. The cap applies separately to each local jurisdiction you report for, so a Hot Springs business could receive up to $1,000 per entity per month. File late and the discount disappears.

Late Penalties

Arkansas charges a 5% penalty on unpaid tax for the first month, plus 5% for each additional month the return remains delinquent, up to 35%.⁹ The state applies either the failure-to-file or failure-to-pay penalty, not both, and interest accrues on top. A return seven months late reaches the 35% ceiling: a $5,000 tax liability becomes $1,750 in penalties alone, before interest. Reasonable cause can waive the penalty; forgetting generally does not qualify.

1
Hot Springs, AR – Official Website. Finance
2
Arkansas Department of Finance and Administration. State Sales and Use Tax Rates
3
Justia. Arkansas Code 26-52-301 – Tax Levied – Definitions
4
Justia. Arkansas Code 26-52-406 – Prescription Drugs and Oxygen
5
Justia. Arkansas Code 26-52-430 – Charitable Organizations
6
Hot Springs, AR – Official Website. Autonomous Commissions – Section: Advertising and Promotion Commission
7
Arkansas Department of Finance and Administration. Register for a Tax Account
8
Arkansas Department of Finance and Administration. Due Dates
9
Justia. Arkansas Code 26-18-208 – Additional Penalties and Tax