Arkansas: Sales Tax Handbook
What purchases are taxable in Arkansas?
The taxability of various transactions (like services and shipping) can vary from state to state, as do policies on subjects such as whether excise taxes or installation fees included in the purchase price are also subject sales tax. This reference is here to help answer your questions about what is and is not subject to the Arkansas sales tax.
Contents1.) Taxability of Goods and Services
- General Arkansas taxability guidelines
- Are services subject to sales tax?
- Is shipping & handling subject to sales tax?
- Are drop shipped items taxable?
Section 1: Taxability of Goods and Services
What transactions are generally subject to sales tax in Arkansas?
In the state of Arkansas, sales tax is legally required to be collected from all tangible, physical products being sold to a consumer. Several examples of exceptions to this tax are certain items which are used in pursuits like agriculture and construction.
This means that someone in the state of Arkansas who sells textbooks would be required to charge sales tax, but an individual who sells agricultural equipment might not be required to charge sales tax.
Are services subject to sales tax in Arkansas?
The state of Arkansas does not usually collect any sales taxes on the vast majority of services performed. An example of taxed services would be one which manufactures or creates a product.
This means that a graphic designer would not be required to collect sales tax, while a someone working in the creation of clothing may be required to collect sales tax.
You can find a table describing the taxability of common types of services later on this page.Top
Are shipping & handling subject to sales tax in Arkansas?
Arkansas has very simple rules when it comes to taxes on shipping. Essentially, if the item being shipped is considered to be taxable in Arkansas, then the shipping is seen as being taxable as well. If the item being shipped is not legally taxable, then the shipping charge should not be taxed. If the shipment involves multiple items, some taxable and some not, the seller is required to tax only the percentage of the shipping charge applying to the taxable items. It must also be noted that any charges which are billed to the purchaser by a carrier who is not the seller are excluded from this tax.Top
Are drop shipments subject to sales tax in Arkansas?
"Drop shipping" refers to the common business practice in which a vendor, often in a different state, makes a sale of a product which is shipped to the end-user by a third party supplier hired by the initial vendor. In Arkansas, drop shipments are generally subject to state sales taxes.
Section 2: Taxability of Various Items in Arkansas
This table shows the taxability of various goods and services in Arkansas. If you are interested in the sales tax on vehicle sales, see the car sales tax page instead. Scroll to view the full table, and click any category for more details.
|Products on Amazon.com||EXEMPT *|
|Food and Meals|
|Grocery Food||TAXABLE *|
|Leases and Rentals|
|Motor Vehicles||TAXABLE *|
|Tangible Media Property||TAXABLE *|
|Manufacturing and Machinery|
|Raw Materials||EXEMPT *|
|Utilities & Fuel||TAXABLE *|
|Medical Goods and Services|
|Medical Devices||EXEMPT *|
|Newspapers and Magazines|
|General Occasional Sales||EXEMPT|
|Optional Maintenance Contracts|
|General Optional Maintenance Contracts||TAXABLE|
|Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts||EXEMPT|
|Pollution Control Equipment|
|General Pollution Control Equipment||TAXABLE *|
|Janitorial Services||TAXABLE *|
|Software and Digital Products|
|Canned Software - Delivered on Tangible Media||TAXABLE|
|Canned Software - Downloaded||EXEMPT *|
|Custom Software - Delivered on Tangible Media||TAXABLE|
|Custom Software - Downloaded||EXEMPT *|
|Customization of Canned Software||EXEMPT *|
|Digital Products||EXEMPT *|
|General Trade-Ins||TAXABLE *|
|Vending Machine Sales|
* See notes in category taxability page for details
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