Arkansas Code of 1987 (2023) › Title 26 - TAXATION (§§ 26-1-101 — 26-82-119) › Subtitle 5 - STATE TAXES (§§ 26-50-101 — 26-65-108) › Chapter 51 - INCOME TAXES (§§ 26-51-101 — 26-51-2804) › Subchapter 10 - WATER RESOURCE CONSERVATION AND DEVELOPMENT INCENTIVES ACT (§§ 26-51-1001 — 26-51-1015) › Section 26-51-1008 - Credit granted - Surface water conversion within critical areas

(a)
For projects located within critical groundwater areas, counties contiguous to counties with areas designated as critical ground water areas, and Chicot County, there shall be allowed a credit against the tax imposed by the Income Tax Act of 1929, §
26-51-101
et seq., to an approved applicant for the reduction of groundwater use by substitution of surface water for water used for industrial, commercial, agricultural, or recreational purposes.
(b)
(1)
For agricultural or recreational projects, there shall be allowed a tax credit to each approved applicant not to exceed the lesser of fifty percent (50%) of the project cost incurred or thirty-five thousand dollars ($35,000).
(2)
(A)
The amount of tax credit allowed to each approved applicant per project that may be used for a taxable year may not exceed the lesser of:
(i)
The amount of individual or corporate income tax otherwise due; or
(ii)
Eighteen thousand dollars ($18,000).
(B)
If the approved applicant is a pass-through entity such as a partnership, a limited liability company taxed as a partnership, a Subchapter S corporation, or a fiduciary, the amount of tax credit that may be used for a taxable year shall not exceed the lesser of:
(i)
The aggregate amount of individual or corporate income tax otherwise due by all members of the pass-through entity; or
(ii)
Eighteen thousand dollars ($18,000).
(3)
Any unused tax credit may be carried over for a maximum of fifteen (15) consecutive taxable years following the taxable year in which the credit originated.
(c)
(1)
For industrial or commercial projects, there shall be allowed a tax credit to each approved applicant not to exceed the lesser of fifty percent (50%) of the project cost incurred or one million dollars ($1,000,000).
(2)
(A)
The amount of tax credit allowed to each approved applicant per project that may be used for a taxable year may not exceed the lesser of:
(i)
The amount of individual or corporate income tax otherwise due; or
(ii)
Two hundred thousand dollars ($200,000).
(B)
If the approved applicant is a pass-through entity such as a partnership, a limited liability company taxed as a partnership, a Subchapter S corporation, or a fiduciary, the amount of tax credit that may be used for a taxable year shall not exceed the lesser of:
(i)
The aggregate amount of individual or corporate income tax otherwise due by all members of the pass-through entity; or
(ii)
Eighteen thousand dollars ($18,000).
(3)
Any unused tax credit may be carried over for a maximum of fifteen (15) consecutive taxable years following the taxable year in which the credit originated.
Amended by Act 2023, No. 814,§ 1, eff. 1/1/2023, app. for tax years beginning on or after January 1, 2023.
Amended by Act 2021, No. 875,§ 3, eff. for tax years beginning on or after January 1, 2021.
Acts 1995, No. 341, § 9; 1997, No. 421, § 1; 1999, No. 765, § 1; 2011, No. 631, § 6.