AR HB1209

Creates the Elective Pass-Through Entity Tax Act allowing business entities (partnerships, LLCs, S-corporations) with members holding over 50% voting rights to elect entity-level taxation annually.

Imposes a 5.9% tax on net taxable income of affected business entities, with capital gains taxed at 50% of that rate (2.95%), payable by the 15th day of the fourth month of the taxable year.

Allows individual members of affected business entities to exclude from their gross income their pro rata share of income subject to the entity-level tax, preventing double taxation.

Permits nonresident individuals with sole Arkansas income from affected business entities to avoid filing individual income tax returns if the entity files and pays taxes due.

Effective for tax years beginning January 1, 2022, with estimated quarterly installment payments required and administration by the Secretary of the Department of Finance and Administration.