Committee approves lower sales tax on low-cost used cars to ease access to transportation

The Senate Revenue & Tax Committee approved House Bill 1912, which reduces the net sales-tax burden on lower-priced used vehicles.

Representative Peyton told the committee the bill keeps the existing $4,000 state-sales-tax exemption and imposes a reduced net tax on vehicles priced between $4,000 and $10,000: "This bill takes the vehicles between 4,000 and $10,000 and introduces a reduced rate of 3.5% instead of 6.5%." DFA analyst Paul Gearing explained the statutory structure: the bill sets a 2.875% state sales-tax rate in law and the additional constitutional levies (highway and conservation) bring the net rate applied to those transactions up to 3.5%.

Senator Johnson and others voiced support for using the change to ease costs for low-income Arkansans who rely on used cars for commuting. Committee members also discussed constitutional constraints on reducing or eliminating levies that voters enacted; Senator Johnson noted that voter-approved levies limit how much the Legislature can alter net rates.

The sponsor moved to pass HB 1912 and the committee approved the motion by voice vote.

What happens next: The bill will move forward in the legislative process with the committeeapproval; sponsors said they plan to continue work on more expansive relief later.