New Sales Tax Exemption for Arkansas Non-Profit Organizations

Posted: October 10, 2025

During the 2025 legislative session, the Arkansas General Assembly passed Act 1007 which provides a sales tax exemption for sales of certain property to qualifying nonprofit organizations. Act 1007 became effective June 1, 2025. This guide explains the general requirements for exemption, the application process, and how the exemption works for non-profit organizations.

What Organizations Can apply for the Sales and Use Tax Exemption?

A sales and use tax exemption is available for certain qualified non-profit organizations. To qualify, the organization must be one that is described under Section 501(c)(3) of the Internal Revenue Code. This generally means a non-profit organization that is organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, and which has obtained approval of such status from the Internal Revenue Service.

Further, the non-profit organization’s annual operating budget cannot be more than $200,000 and the organization must perform charitable community-based services in Arkansas to benefit residents of the state that are in need of assistance.

The Application Process

If the organization meets these requirements, then it must submit an application to the Arkansas Department of Finance and Administration in order to receive an exemption certificate. The Arkansas Department of Finance and Administration has released an online application that can be accessed through the Arkansas Taxpayer Access Point (ATAP). This application will require the following:

• The name and mailing address of the organization
• Names of directors and officers for the organization
• A description as to the nature of the organization’s activities in Arkansas
• The organization’s North American Industry Classification System (NAIC) code
• The organization’s federal employment identification number
• A designated contact person for the application
• A copy of the 501(c)(3) determination letter sent by the IRS

Once the information is provided, a certificate of exemption will be sent to the filer upon approval by the Arkansas Department of Finance and Administration. This certificate must be re-certified every three (3) years to maintain the exemption.

Use of the Exemption

An exemption from sales tax will allow the non-profit organization to have potentially significant tax savings depending on its activities in the state. It can significantly reduce expenses for the organization as the exemption excludes sales tax on the sales of most tangible personal property, digital products, and services. However, the exemption will not apply to the following:

• Motor vehicles
• Boats
• Aircraft
• Alcoholic beverages
• Tobacco
• Computers
• Materials used to construct residential or commercial structures
• Household appliances
• Cell phones
• All-terrain vehicles (ATVs)
• Televisions

If we can assist you with your non-profit organization, please call or email one of our non-profit attorneys featured on this page, or submit an online inquiry via our contact form.