TO CREATE A SALES AND USE TAX EXEMPTION FOR PARTS FOR AND REPAIR OF AGRICULTURAL EQUIPMENT AND MACHINERY.

Fiscal Impact Statement 95th General Assembly of the State of Arkansas Regular Session, 2025 ______________________________________________________________________________ DATE: 2/27/2025 BILL: HB1464, As originally introduced SPONSOR: Rep. Vaught, Rep. Cavenaugh SUBTITLE: TO CREATE A SALES AND USE TAX EXEMPTION FOR PARTS FOR AND REPAIR OF AGRICULTURAL EQUIPMENT AND MACHINERY. ______________________________________________________________________________ TOPIC √ SALES AND USE TAX EXEMPTION FOR PARTS FOR AND REPAIR OF AGRICULTURAL EQUIPMENT AND MACHINERY. AFFECTED FUNDS √ General Revenue and Other (City and County) REVENUE IMPACT √ Estimated Dynamic Impact FY2026: Estimated reduction of 14.71 million dollars in General Revenue FY2027: Estimated reduction of 22.79 million dollars in General Revenue ASSUMPTIONS - BASED ON: √ Arkansas Department of Finance and Administration √ Regional Economic Models, Inc. ADDITIONAL COMMENTS Prepared by Fiscal Services Division, AR Bureau of Legislative Research

Fiscal Impact Statement Bill: HB1464 Bill Subtitle: TO CREATE A SALES AND USE TAX EXEMPTION FOR PARTS FOR AND REPAIR OF AGRICULTURAL EQUIPMENT AND MACHINERY. --------------------------------------------------------------------------------------------------------------------------------------- Sponsors: Reps. Vaught and Cavenaugh Basic Change: HB1464 creates a sales and use tax exemption for the sale of: (1) parts purchased to modify, replace, or repair, in whole or in part, existing agricultural equipment and machinery; and (2) services relating to the initial installation, alteration, addition, cleaning, refinishing, replacement, or repair of agricultural equipment and machinery. HB1464 provides definitions for "agricultural equipment and machinery" and "farming": • "Farming" means the agricultural production of food or fiber as a business or the agricultural production of grass sod or nursery products as a business; • "Agricultural equipment and machinery" means implements used exclusively and directly in farming, including: • Irrigation pipe used to carry water from an irrigation well to the crops produced in farming regardless of whether the irrigation pipe is used above ground