Question

1. Identify the important elements of sales taxation in your state (Arkansas). What governments levy general and selective sales taxes? Identify the following for the RST: What commodity sales are exempt? Are services taxed? What is the nominal rate? What are the brackets? Does your state (Arkansas) provide sales tax credits? In regard to selective excises: What selective excises are used? How are their bases defined? What rates apply?

Answer 1

The Arkansas (AR) state sales tax rate is currently 6.5%. Depending on local municipalities, the total tax rate can be as high as 11.25%.

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.

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
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 *

This table shows the taxability of various goods and services in Arkansas

Amazon Purchases
Products on Amazon.com	TAXABLE *
Clothing
General Clothing	TAXABLE
Food and Meals
Catering	TAXABLE *
Grocery Food	TAXABLE *
Leases and Rentals
Motor Vehicles	TAXABLE *
Tangible Media Property	TAXABLE *
Manufacturing and Machinery
Machinery	TAXABLE *
Raw Materials	EXEMPT *
Utilities & Fuel	TAXABLE *
Medical Goods and Services
Medical Devices	EXEMPT *
Medical Services	EXEMPT
Medicines	TAXABLE
Newspapers and Magazines
Newspapers	EXEMPT
Periodicals	TAXABLE *
Occasional Sales
General Occasional Sales	EXEMPT
Motor Vehicles	TAXABLE
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 *
Services
Janitorial Services	TAXABLE *
Transportation Services	EXEMPT
Software and Digital Products
Canned Software - Delivered on Tangible Media	TAXABLE
Canned Software - Downloaded	EXEMPT *
Custom Software - Delivered on Tangible Media	TAXABLE
Excise taxes, also known as selective sales or differential commodity taxes, are levied for the sales of specific goods or services. Excise taxes are considered indirect taxes because they are not charged directly to individuals. In most cases, the excise tax is paid by the producer or seller of an item. The cost of the tax is then included in the sale price of the item and passed on to the consumer.