The Arkansas R&D tax credit, explained
Arkansas offers R&D tax credits of 20% to 33% of qualifying spend, but a company must apply to AEDC and get approved first.
Last verified July 2026 against Arkansas Economic Development Commission guidance.
The short answer
Yes, Arkansas has state R&D tax credits, run through the Arkansas Economic Development Commission (AEDC) rather than claimed automatically on a tax return. The state offers a few versions depending on the type of company and research.
How the Arkansas credit works
An established company doing in-house research can get a credit of 20% of the year-over-year increase in qualified spending. Businesses that sign a financial incentive agreement with AEDC as a targeted or strategic-value business can qualify for a richer 33% credit, though the strategic-value version caps out at $50,000 a year per taxpayer.
The credit is nonrefundable but can offset up to 100% of a company's Arkansas tax liability in a given year, and unused amounts carry forward for nine years.
How it stacks with the federal credit
Arkansas' state credit stacks on top of the federal R&D credit, but only after AEDC approves the company's research program. The federal credit does not require any pre-approval and covers engineer wages, contractor costs, and cloud infrastructure used for development.
A startup under $5 million in revenue can apply up to $500,000 of the federal credit against payroll taxes each year, which is often the more immediate win for an early company still waiting on AEDC approval.
Example: a 6-person Arkansas engineering team with $520,000 in qualified salaries could see a federal credit of roughly $36,000 to $52,000. If AEDC approves the company for the 33% targeted business rate on that same spending, the state credit could add substantially more, though most early companies will land closer to the 20% in-house rate on their year-over-year increase, not the full amount spent.
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Eligibility and how to claim it
Arkansas' R&D credits are not something a CPA can simply calculate and attach to a return. A company applies to the Arkansas Economic Development Commission and signs an agreement before the credit is available for a given research program.
Once approved, AEDC issues a Certificate of Tax Credit, which the company's CPA attaches to the Arkansas corporate income tax return as proof of the approved amount.
Because approval usually needs to happen before or early in the research, an Arkansas startup planning meaningful R&D spending should reach out to AEDC well before year end, not at tax time.
Official source: Arkansas Economic Development Commission.
Carryforward and deadlines
Unused Arkansas R&D credit carries forward for nine years. The credit can offset up to 100% of tax liability in any year it is used.
There is no fixed annual application deadline in statute, but AEDC approval takes time and generally needs to happen before the research year closes, so companies should apply early rather than waiting for tax season.