Arkansas lawmakers update taxation laws for candy and soft drinks

The Arkansas State Legislature has introduced House Bill 1685, a significant piece of legislation aimed at reforming the state's tax structure, particularly concerning the sale of food items and beverages. Introduced on April 22, 2025, the bill seeks to clarify the taxation of candy and soft drinks, ensuring that these items are distinctly categorized from essential food products under Arkansas tax law.

One of the key provisions of HB1685 is the establishment of a list of Universal Product Codes (UPCs) for items classified as candy and soft drinks. This list, to be published by the Secretary of the Department of Finance and Administration, will serve as a guide for retailers and vendors, helping them determine which products are subject to sales tax. Notably, the bill exempts this list from the Arkansas Administrative Procedure Act, streamlining the process for implementation.

The bill also stipulates that gross receipts or proceeds from the sale of these items will be taxed similarly to other gross receipts taxes in Arkansas. Revenue generated from these taxes will be directed into the Educational Adequacy Fund, which supports public education funding in the state. This provision highlights the bill's dual focus on tax reform and educational financing.

Debate surrounding HB1685 has centered on its potential economic implications. Proponents argue that the bill will provide clarity and fairness in tax collection, while opponents express concerns about the impact on low-income families, who may be disproportionately affected by increased taxes on candy and soft drinks. The bill's passage could lead to a broader discussion on tax equity and the prioritization of essential goods versus luxury items.

As the legislative session progresses, the bill's future remains uncertain. If passed, HB1685 could reshape Arkansas's tax landscape, influencing both consumer behavior and state funding for education. Stakeholders are closely monitoring the bill's developments, anticipating its potential effects on the state's economy and public services.