Fort Smith, Ark. – A new bill filed in the Arkansas State Legislature on Monday seeks to modify the state’s sales tax structure for used vehicles and introduce motorboats as a taxable item. Senate Bill 49 (SB49), introduced by Senator Justin Boyd (R-Fort Smith) and Representative Lee Johnson (R-Greenwood), would raise the lower limit for the application of the state’s used vehicle tax.
Currently, Arkansas imposes a 2.875% sales tax on used vehicles sold for between $4,000 and $10,000. SB49 proposes to increase the tax threshold for used cars, applying the same tax rate to vehicles priced between $10,000 and $15,000, while maintaining the current rate for vehicles under $10,000. The bill does not propose any change to the tax range for trailers and semitrailers, which would remain between $4,000 and $10,000.
In addition to the changes regarding used cars, the bill also introduces motorboats into the taxable category. Under the new proposal, motorboats valued between $4,000 and $10,000 would be subject to the same 2.875% sales tax currently applied to vehicles in that price range.
The new legislation, filed on the first day of the 2025 legislative session, has drawn attention due to its impact on vehicle sales tax in the state. Proponents argue that the changes will bring the tax code in line with current market trends, while critics may express concern over the potential increase in costs for consumers purchasing used vehicles or motorboats.
For those seeking more information, the Arkansas Department of Finance and Administration offers an online tool to help residents calculate the applicable sales tax on vehicle purchases.
The bill’s introduction sets the stage for debate and potential amendments as the legislative session progresses.