Arkansas Sales Tax Exemptions / Tax Free Items Arkansas: Sales Tax Handbook

Arkansas:

What purchases are exempt from the Arkansas sales tax?

While the Arkansas sales tax of 6.50% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in Arkansas.

Sales Tax Exemptions in Arkansas

In Arkansas, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers.

Several examples of exceptions to the sales tax are certain items which are used in pursuits such as agriculture and construction.

Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for Arkansas:


Clothing

  6.5%

Groceries

  2%

Prepared Food

  6.5%

Prescription Drugs

  EXEMPT

OTC Drugs

  6.5%

These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.

Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":


Is candy taxable in Arkansas? Candy IS considered a grocery in Arkansas
Is soda taxable in Arkansas? Soda IS considered a grocery in Arkansas

Are services, shipping, installation, etc taxable in Arkansas?

The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the Arkansas sales tax see the Arkansas sales taxability FAQ page.


Other tax-exempt items in Arkansas

This table lists a number of additional categories of goods and services that are exempt from Arkansas' sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in Arkansas.

Category Exemption Status
Amazon Purchases
Products on Amazon.com EXEMPT *
Manufacturing and Machinery
Raw Materials EXEMPT *
Medical Goods and Services
Medical Devices EXEMPT *
Medical Services EXEMPT
Newspapers and Magazines
Newspapers EXEMPT
Occasional Sales
General Occasional Sales EXEMPT
Optional Maintenance Contracts
Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts EXEMPT
Services
Transportation Services EXEMPT
Software and Digital Products
Canned Software - Downloaded EXEMPT *
Custom Software - Downloaded EXEMPT *
Customization of Canned Software EXEMPT *
Digital Products EXEMPT *
Vending Machine Sales
Food EXEMPT *
Merchandise EXEMPT *

* See notes in category taxability page for details



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Source: http://www.salestaxhandbook.com/arkansas/sales-tax-exemptions