Forest ProductsTax Credit Sourcebook

Arkansas · research and development · AR-RD-001

In-House Research Income Tax Credit

Publication revised September 24, 2026. Sourcebook page 41.

Credit amount / calculation

Generally 20% of qualifying in-house research expenditures above the base amount.

Business fit and eligible activity

Qualified approved research performed in Arkansas can generate a state credit. Qualified research activity. Ordinary production, routine quality control and an equipment purchase alone do not qualify.

Eligibility and practical use

Eligible research can take place at a wood-products business. The credit applies to qualifying research expenses, not the purchase price of production equipment. Obtain approval for the research project and document the work and eligible costs.

Illustrative business benefit

A hardwood mill spends $320,000 on a documented project to improve recovery from low-grade logs using scanner changes, controlled test runs, software adjustments, and revised sawing patterns. Assume $200,000 is ultimately treated as the relevant qualified or excess research base. At 20%, the state credit would be about $40,000 before program caps and tax-liability limits. The company would need records showing the uncertainty, alternatives tested, people involved, and results - not simply a year-end estimate of 'engineering time.'

Timing / first action

Check application or certification requirements before incurring the qualifying expense or beginning the qualifying activity.

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