Arkansas schools have long enjoyed a tax exemption status for certain purchases, which has played a significant role in their funding and resource allocation.
This exemption historically allowed public schools to make tax-free purchases of instructional materials, ensuring a well-resourced learning environment for students.
However, with the advent of technology, the question arises whether this tax exemption applies to the purchase of equipment related to digital learning materials and software.
Act 914 of 2021 indeed expanded the tax exemption provided to Arkansas public schools to include the purchase of equipment necessary for using technology-based educational materials and software.
This expansion of the sales tax exemption policy not only benefits the schools’ budget but also empowers educators with modern tools to enhance their students’ learning experience.
Key Takeaways
- Arkansas public schools benefit from tax exemptions on instructional materials and equipment purchases.
- Act 914 of 2021 expanded the exemption to include technology-based educational materials and software.
- This tax exemption policy positively impacts school budgets and supports the integration of modern learning tools.
Arkansas Schools Tax Exemption
Public Schools vs Private Schools
Arkansas public schools generally receive certain tax exemptions. All public school buildings and grounds used for educational purposes, not generating profit, are exempt from property taxation, as stated in Arkansas Code §26-3-301.
Additionally, public schools receive a tax-free exemption for purchasing instructional materials, as detailed in Act 914 (2021).
Private schools may also be granted property tax exemptions under certain conditions. Private school buildings used exclusively for educational purposes and not generating profit may qualify for the exemption.
Arkansas Code
Arkansas Code §26-52-437 specifically addresses tax exemptions for textbooks and instructional materials for public schools.
According to this code, instructional materials are exempt from the state’s gross receipts tax. The tax exemption applies to purchases made by public schools and includes technology-based educational materials and software.
However, for sales by school districts or public schools, no general exemption applies. There are certain specific exemptions, listed in Rule 006.05.08-004-GR-35, that address provisions such as textbooks, instructional materials, and sales of food.
In conclusion, Arkansas schools do benefit from tax exemptions on specific items or areas, with public schools receiving property tax exemptions and exemptions on instructional material purchases.
These exemptions are subject to the state’s legal provisions and apply in accordance with the Arkansas Code.
Sales Tax Exemption in Arkansas Schools
Instructional Materials and Equipment
Arkansas public schools benefit from a tax exemption on the purchases of instructional materials.
This exemption historically applied only to traditional materials but has now been expanded to include equipment required for technology-based educational materials and software, in accordance with Act 914 of 2021.
Examples of tax-exempt items include:
- Textbooks
- Printed materials
- Computers
- Projectors
- Educational software
Technology-based Educational Materials
As part of the tax exemption expansion, schools can now purchase technology-based educational materials and software without incurring sales tax. This encourages schools to integrate modern technology into their classrooms, enhancing students’ learning experiences while reducing the financial burden on schools.
Tax exemption covers:
- Digital textbooks
- Online resources
- Interactive learning software
- Virtual laboratory applications
Services and Sales Tax Exemption
In addition to exemptions on instructional materials and equipment, Arkansas schools may also be eligible for sales tax exemptions on certain services, depending on the state tax regulations.
Sales tax exemptions can be applied to services such as:
- Maintenance and repairs for educational equipment
- Telecommunications services for educational purposes
- Professional development services for teachers
In conclusion, Arkansas public schools benefit from sales tax exemptions on various instructional materials, equipment, and services. These exemptions help schools allocate more resources towards improving the quality of education for their students.
Sales and Use Tax Exemption for Software
Electronic Software
In Arkansas, certain items used in education may be exempt from sales and use tax. Act 914, effective July 1, 2021, expanded the tax exemption for instructional materials to include electronic software. This means that technology-based educational materials and electronic software used in Arkansas public schools may be eligible for sales and use tax exemption. The exemption aims to facilitate access to essential digital learning tools and reduce costs for schools.
Machinery
The sales and use tax exemption in Arkansas also applies to certain types of machinery used in agriculture and construction. Schools that are involved in these industries may benefit from tax exemptions on equipment such as tractors, construction materials, and tools used for educational purposes. More information on these exemptions can be found on the Arkansas Sales Tax Handbook website.
Construction
In addition to software and machinery, Arkansas provides sales and use tax exemptions for items used in construction. This includes construction materials and equipment used by Arkansas schools if these items are explicitly intended for school-related projects. It’s important for schools to be aware of and utilize these exemptions in an effort to reduce costs and allocate resources more effectively. Further details on these exemptions are also available on the Arkansas Sales Tax Handbook website.
Comparison with Other States
Arizona
In Arizona, public schools are generally exempt from property taxes but are subject to other forms of taxation. There are some sales tax exemptions in Arizona for specific educational purchases, such as textbooks and educational software. Additionally, nonprofit organizations that support public schools may qualify for sales tax exemptions. Arizona’s state sales tax rate is 5.6%, with local rates adding up to an average combined sales tax rate of 8.4%1.
California
California’s public schools are generally exempt from property taxes and benefit from several sales tax exemptions as well. Educational materials such as books, computers, and laboratory equipment may be exempt from sales tax, depending on the circumstances2. The state sales tax rate in California is 7.25%, with local rates adding further taxes, resulting in an average combined sales tax rate of 8.66%.
South Carolina
South Carolina also provides property tax exemptions for public schools. However, the sales tax exemptions are more limited for South Carolina schools compared to California and Arizona. The state sales tax rate in South Carolina is 6%, with local rates potentially raising it to a maximum combined sales tax rate of 9%3. Schools may be able to receive sales tax exemptions for some purchases, such as instructional materials, equipment, and supplies, depending on specific criteria4.
Frequently Asked Questions
Is school property tax exempt in AR?
Yes, public schools in Arkansas are typically tax-exempt. Act 914 of 2021 expands the tax-free exemption historically provided to public schools on purchases of instructional materials to now include the purchase of equipment required to make use of technology-based educational materials and software.
Who qualifies for property tax exemption?
In general, property tax exemptions are available for certain individuals and organizations. Some exemptions can be based on age, disability, or income level, while others apply to specific organizations, such as qualifying nonprofit organizations, schools, and religious institutions. Be sure to check with your local tax assessor’s office to determine your eligibility.
Are churches sales tax exempt in AR?
Yes, churches and religious institutions in Arkansas are generally exempt from sales tax. They may qualify for an exemption on purchases made for religious or educational purposes. However, this doesn’t apply to all purchases, so it’s important to consult with a tax professional or the Arkansas Department of Finance and Administration for specific information.
How to apply for tax exemption?
To apply for tax exemption in Arkansas, you will need to complete the appropriate forms and provide the required supporting documents. The application process may vary depending on the type of exemption you are seeking. For more information, visit the Arkansas Department of Finance and Administration’s website.
What services are exempt from sales tax?
Some services in Arkansas are exempt from sales tax. Examples include certain professional services (such as legal and medical services), educational services, and childcare services. Be sure to consult the Arkansas Department of Finance and Administration for a complete list of tax-exempt services.
What is AR gross receipts tax?
The Arkansas gross receipts tax, also known as the sales and use tax, is a tax levied on the sale of tangible personal property and certain services within the state. The current state sales tax rate is 6.5%, with localities having the option to impose additional rates.
A detailed list of exemptions from the Arkansas gross receipts tax can be found in the Exemptions From Tax document provided by the Arkansas General Assembly.
Footnotes
- https://www.azdor.gov/sites/default/files/media/AZDOR_School%20Financing%20and%20Taxes%202016.pdf ↩
- https://www.cde.ca.gov/fg/aa/ca/schoolpropertystat.asp ↩
- https://dor.sc.gov/system/files_force/Salestaxratesjan2013.pdf?download=1 ↩
- https://dor.sc.gov/forms-site-search?search_api_fulltext=sales%20tax%20exemption%20schools&f%5B0%5D=field_facet_form_category%3A1 ↩
