To Create The Remote And Mobile Work Modernization And Competitiveness Act; And To Provide Income Tax And Withholding Exemptions Related To Certain Remote And Mobile Employees And Nonresidents.
HB1116 creates the “Remote and Mobile Work Modernization and Competitiveness Act” and revises Arkansas income tax rules for certain nonresidents and employees who work remotely or across multiple states. The bill authorizes the Department of Finance and Administration to enter into reciprocity agreements with other states, subject to Legislative Council approval, so that residents of those states may be exempt from Arkansas income tax when the other state offers a similar exemption to Arkansas residents.
The bill also creates a new income tax exemption for individuals who earn $2,500 or less in a tax year for work performed while physically present in Arkansas, so long as they worked for an employer in more than one state during that year. In addition, it changes withholding rules so employers generally do not have to withhold Arkansas income tax for employees who are in the state 15 or fewer calendar days in a tax year and who work in more than one state, with exceptions for certain athletes, entertainers, and public figures paid on a per-event basis. If an employee exceeds 15 days in Arkansas, withholding applies retroactively to all days worked in the state during the year.
The bill further limits employer liability for failing to withhold in multi-state work situations when the employer uses a qualifying time-and-attendance system or other specified records, employee statements, or travel documentation to determine withholding obligations. These changes would amend Arkansas income tax, withholding, and employer-liability provisions in Title 26, Chapter 51, and would apply to tax years beginning on or after January 1, 2026.
The overall sentiment reflected in the bill text is favorable toward remote and mobile work, emphasizing modernization, competitiveness, and reducing administrative burdens on employers and workers. The findings section suggests the bill is intended to make Arkansas more hospitable to remote workers and to simplify compliance for short-term or multi-state work arrangements. No committee transcripts or recorded votes were provided, so there is no additional public debate or recorded opposition to assess from the available materials.
The main points of potential contention are the reduced withholding obligations for employers, the limited tax exemption for low-dollar in-state work by multi-state employees, and the reciprocity authority granted to DFA. Employers may view the bill as compliance relief, while tax administrators or critics could be concerned about revenue loss, enforcement complexity, or the need to verify work location and days present in the state. The special carve-outs for athletes, entertainers, and public figures also indicate that some categories of workers are treated differently from the general remote-work rule.
HB1116 would amend Arkansas income tax law to create a new exemption for certain remote and mobile employees, revise nonresident tax treatment through reciprocity agreements, and narrow withholding and employer-liability requirements for multi-state workers. It would affect Arkansas Code §§ 26-51-202, 26-51-317, 26-51-905, and 26-51-916, and would apply beginning with tax years on or after January 1, 2026.
The bill’s tone is strongly pro-business and pro-remote-work, with legislative findings framing the measure as a modernization effort to reduce burdens on workers and employers and improve Arkansas’s competitiveness. Because no committee discussion or votes were provided, the available record shows no explicit opposition or support beyond the bill’s own stated policy rationale.
Likely areas of contention include whether the bill would reduce state tax revenue, whether the 15-day withholding threshold and $2,500 exemption are too broad or too narrow, and whether employers can reliably track employee location and workdays. The reciprocity provision may also draw scrutiny because it gives DFA authority to negotiate agreements, but only with Legislative Council approval. The special exclusions for athletes, entertainers, and public figures suggest a policy choice that could be debated as either necessary or uneven treatment.