SB204
To Exempt From Gross Income A Gain By A Taxpayer Resulting From The Acquisition Of Property Under The Right Of Eminent Domain Or The Threat Of Condemnation.
Last Action (May 5, 2025): Died in Senate Committee at Sine Die adjournment.
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AI-Generated Summary
Senate Bill 204 amends the Arkansas Income Tax Act of 1929 to provide a state income tax exemption for capital gains realized by taxpayers when their real property is acquired by an entity exercising the power of eminent domain or acting under the threat of condemnation. Currently, such gains may be subject to state income tax; this bill excludes them from gross income for tax purposes. The exemption applies to acquisitions performed under specific sections of the Arkansas Code related to the power of eminent domain. The provisions of this act become effective for tax years beginning on or after January 1, 2025.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries are individual taxpayers and business entities that own real property and face the involuntary loss of that property through government or utility-led eminent domain proceedings or the threat of such action. By exempting the resulting financial gain from state income taxes, these property owners will retain more of the proceeds provided to them as compensation for their land.
Who Might Suffer?
The primary entity negatively impacted is the State of Arkansas, specifically its treasury, as the bill will result in a reduction of state income tax revenue. While the impact per transaction may vary, the aggregate effect represents a decrease in the tax base and potential funding available for state programs and services.
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