Arkansas sales tax exemptions cover groceries, prescription drugs and certain prescribed medical equipment, most farm and manufacturing inputs, purchases by the federal government and qualifying nonprofits, private one-off sales of personal property, and everything bought during the state’s annual back-to-school weekend. The state rate is 6.5%, and cities and counties layer their own taxes on top, so a combined rate can reach 11.5% in some places. Most exemptions apply only to the state portion, and almost none of them are automatic: the buyer has to give the seller a completed exemption certificate, and the seller has to keep it.
Groceries
Since January 1, 2026, Arkansas charges zero state sales tax on food and food ingredients.1Arkansas House of Representatives. Laws Taking Effect January 1st That covers produce, meat, dairy, canned goods, and baking supplies sold for human consumption. Local city and county taxes on groceries were not touched by the change, so your receipt may still show tax owed to the municipality.
“Prepared food” stays fully taxable at both state and local rates. Food is prepared if the seller heats it, if the seller combines two or more ingredients into one item (a deli salad, a made-to-order sandwich), or if it’s sold with utensils provided by the seller. A store where more than 75% of food sales are already prepared food can have all its food sales treated as prepared once it makes utensils available at a self-service station.2Justia. Arkansas Code 26-52-317 – Food and Food Ingredients
Food that a seller only cuts, repackages, or pasteurizes still qualifies. Raw eggs, fish, meat, and poultry that the buyer must cook to eat safely also qualify.
Prescription Drugs and Medical Equipment
Prescription drugs and oxygen sold for human use are exempt from state and local sales tax when dispensed by a licensed pharmacist, hospital, or physician.3Justia. Arkansas Code 26-52-406 – Prescription Drugs and Oxygen Over-the-counter medicines are not covered.
Four additional categories of medical goods are exempt, but only when a physician has prescribed them for a specific patient before the sale:4Justia. Arkansas Code 26-52-433 – Durable Medical Equipment, Mobility Enhancing Equipment, Prosthetic Devices, and Disposable Medical Supplies
- Durable medical equipment for home use, such as hospital beds, oxygen concentrators, and nebulizers.
- Mobility enhancing equipment like wheelchairs, walkers, and scooters.
- Prosthetic devices worn on or in the body, including artificial limbs and orthotic braces. Corrective eyeglasses, contact lenses, and dental prostheses are excluded.
- Disposable medical supplies such as ostomy supplies, incontinence products, and laxatives used in routine bowel care.
Repair and replacement parts for qualifying durable medical equipment, mobility enhancing equipment, and prosthetic devices are also exempt.
Low-Income Electricity
Residential customers with total household income of $12,000 or less per year can get the first 500 kilowatt-hours of electricity each month exempt from the state gross receipts tax and other state excise taxes.5Justia. Arkansas Code 26-52-416 – Electricity Sold to Low-Income Households To claim it, fill out Form E-416 from the Department of Finance and Administration and give it to your electric utility.6Arkansas Department of Finance and Administration. Form E-416 – Claim for Low-Income Electricity Customers Sales Tax Exemption The utility applies the exemption going forward once it has your claim.
Vehicle Trade-Ins and Private Sales
When you trade a vehicle in toward another vehicle, Arkansas taxes only the net difference. Buy a $30,000 truck, trade a car worth $10,000, and you pay tax on $20,000.7Justia. Arkansas Code 26-52-401 – Various Products and Services
Selling your old vehicle privately still gets you the credit if you buy the replacement within 60 days of the private sale. Bring a bill of sale signed by all parties, showing the amount you received, to the revenue office when you register the new vehicle.
A one-off sale of personal property by someone not in the business of selling that kind of item, called an “isolated sale,” is exempt from gross receipts tax. Selling your old couch to a neighbor is the classic example. Motor vehicles, trailers, semi-trailers, mobile homes, and airplanes are excluded from this exemption, so a used car bought from a private seller is still taxed when you register it.8Justia. Arkansas Code 26-53-126 – Tax on New and Used Motor Vehicles Sales at special events are also excluded.
The Back-to-School Weekend
Arkansas holds a sales tax holiday every year on the first weekend of August. In 2026, it runs from 12:01 a.m. Saturday, August 1 through 11:59 p.m. Sunday, August 2. Qualifying clothing, school supplies, school art supplies, school instructional materials, and certain electronic devices are exempt from all state and local sales and use taxes.9Arkansas Department of Finance and Administration. 2026 Sales Tax Holiday Retailers must participate.
Farm and Manufacturing Exemptions
Farmers and manufacturers get exemptions built around how the purchased property is actually used.
New and used farm equipment used exclusively and directly in the agricultural production of food, fiber, grass sod, or nursery products as a business is exempt from gross receipts tax, along with implements used to harvest crops grown by others.10Justia. Arkansas Code 26-52-403 – Farm Equipment and Machinery Highway-registered motor vehicles, airplanes, hand tools, and timber-production implements do not qualify. Seed, fertilizer, limestone, pesticides, herbicides, livestock vaccines, and feedstuffs used in commercial production are also exempt.
Rather than handing over a certificate at every purchase, eligible farmers can apply through the state’s online taxpayer portal for an Arkansas Farmer Sales Tax Exemption Card. It costs $20 initially and $10 to renew, and lasts eight years.11Arkansas Department of Finance and Administration. Commercial Farmer Sales Tax Exemption The applicant has to show the Department of Finance and Administration that they’re farming as a business at commercially marketable scale.
On the manufacturing side, machinery and equipment used directly in producing, manufacturing, processing, assembling, finishing, or packaging articles of commerce at an Arkansas plant are exempt from use tax, whether for a new facility or as a full replacement of an existing machine.12Justia. Arkansas Code 26-53-114 – Exemption for Certain Machinery and Equipment Hand tools, maintenance equipment, and general plant infrastructure like lighting and climate control are excluded. Raw materials and components that become part of a finished product for resale are exempt, as are catalysts and chemicals consumed in production.
Natural gas, electricity, and coal sold to a manufacturer for direct use in the manufacturing process are taxed at zero percent.13Justia. Arkansas Code 26-52-319 – Natural Gas, Electricity, and Coal The manufacturer files a utility sales tax exemption form with its utility, backed by a study separating production energy from other uses. Only the production share gets the zero rate. Pollution control equipment required by state or federal environmental rules is also exempt, along with its replacement parts and consumables, provided the facility has written documentation from the Division of Environmental Quality or the EPA.
Government and Nonprofit Buyers
Sales to the United States government are exempt.7Justia. Arkansas Code 26-52-401 – Various Products and Services In practice, that means purchases on a centrally billed federal account qualify, but purchases a federal employee puts on a personal or individually billed card do not.14GSA SmartPay. Arkansas Tax Information
Sales to the State of Arkansas and its subdivisions are generally taxable. The main carve-outs are school buses sold to public school districts and motor vehicles sold to municipalities, school districts, and state-supported colleges and universities.15Legal Information Institute. Arkansas Code R. 006.05.06-005-GR-34 – Exemptions from Tax – Motor Vehicles Purchased by Specific Individuals and Organizations Regional airport authorities and public housing authorities also hold exempt status.
Specific nonprofits are exempt by statute, including the American Red Cross and Habitat for Humanity. Act 1007 of 2025 added an exemption for qualified 501(c)(3) nonprofits with annual operating budgets under $200,000 that provide charitable community-based services to Arkansas residents in need.16Arkansas Department of Finance and Administration. What’s New in Sales Tax for 2025 The exemption covers most tangible personal property and services, but not motor vehicles, computers, or construction materials. Nonprofits have to apply to the Department of Finance and Administration for confirming documentation before claiming it.
How to Claim an Exemption
No exemption is automatic at the register. The buyer provides documentation, and the seller has to collect and keep it. In an audit, the burden of proving a sale was exempt falls on the seller.
The standard document is the Arkansas Sales and Use Tax Exemption Certificate, Form ST391, and the multi-state Streamlined Sales and Use Tax Certificate of Exemption is also accepted.17Arkansas Department of Finance and Administration. Arkansas Sales and Use Tax Exemption Certificate – Form ST391 The buyer fills in a tax permit number, the reason for the exemption, and a description of what’s being purchased. A seller can accept the completed certificate at the time of sale or up to 90 days after.18Justia. Arkansas Code 26-52-517 – Exemption Certificates
A seller who follows the certificate rules and accepts a properly completed one is relieved of tax liability even if the buyer’s claim later turns out to be invalid. That protection is lost if the seller fraudulently fails to collect tax, coaches a buyer into a bogus claim, or accepts an entity-based exemption Arkansas doesn’t recognize.
Some exemptions require paperwork before you get to the register. Manufacturers and nonprofits apply to the Department of Finance and Administration in advance. Farmers use the eight-year exemption card. Low-income electricity customers file Form E-416 with the utility.
Penalties for Claiming an Exemption You Don’t Qualify For
A tax deficiency caused by negligence or intentional disregard of the law carries a 10% penalty on top of the tax owed. If the Department of Finance and Administration finds the deficiency was due to fraud, the penalty is 50% of the unpaid tax, plus interest. A taxpayer who keeps filing returns with false information after being warned by the department picks up an additional $50 penalty per return.