Committee approves DFA rule to let beer and sake producers claim credit for using Arkansas rice

Alicia Austin Smith, chief counsel for revenue at the Department of Finance and Administration, presented a rule implementing Act 874 of 2025 to create a tax credit for the use of Arkansas rice in the production of beer and sake. "To qualify, you have to actually be subject to the tax, and then you also have to have use 20% Arkansas rice in your grain bill in the production of that beer and sake," Smith told the committee, describing the threshold for eligibility.

Smith said the department adapted the existing beer excise tax reporting form so producers can claim the credit on their regular return and attach their grain bill to show the math. She told the committee the credit is calculated by multiplying the percentage of Arkansas rice used in the grain bill by the amount of the excise tax assessed on the production.

DFA reported that it held a public hearing on Dec. 3 and received five written comments during the public-comment period (which closed Dec. 16); no changes were made to the rule in response. Senator Johnson raised concerns that the law may have been written narrowly for a few producers; DFA replied that the rule simply tracks the statute and any verification issues would be administrative (for example producers may need to obtain a grain bill from a manufacturer). Senator Irving asked how DFA will validate claims; DFA said producers must provide a copy of the grain bill as proof and DFA can review that documentation.

The committee approved the rule without objection. DFA said it did not sample the product itself during rule development and will rely on documentation supplied by claimants for verification.