LITTLE ROCK, Ark. - A tax exemption projected to save Arkansas farmers millions in annual utility costs took effect today. Act 1401 of the 2013 legislative session created a state and local sales tax exemption on utilities used by a grain drying and storage facility. Utilities include electricity, liquefied petroleum gas and natural gas.
"Grain storage keeps the Arkansas rice industry globally competitive and helps farmers avoid selling grain when prices are low," said Arkansas Rice Executive Director Ben Noble. "This exemption will deliver tax relief to farmers across the delta as they continue to feel the financial squeeze from reductions in federal farm support as well as increasing input costs."
According to Arkansas Department of Finance and Administration fiscal projections, the tax exemption will save Arkansas farmers $3.89 million in 2015 and $4.01 million by 2016.
In order to receive the tax exemption, the utility must be separately metered and only used for on-farm grain storage or drying. Utilities used in irrigation do not apply. Farmers who want to claim this tax exemption must receive approval from the Arkansas Department of Finance and Administration (DFA) by filling out a form.
Arkansas is the nation's number one rice-producing state, accounting for almost 50 percent of the U.S. rice production. Rice is the state's second highest value commodity, top agricultural export, and contributes more than $6 billion to the state's economy annually.
The Arkansas DFA form can be found at www.arkansasricefarmers.org/taxexemption.