Beginning January 1, 2026, Arkansas will no longer impose a state sales or use tax on groceries, thanks to the newly enacted Grocery Tax Relief Act (HB 1685 / Act 1008). This change is expected to lower grocery bills for residents while simplifying tax compliance for food retailers.
Businesses Selling Groceries in Arkansas: Here’s What You Need to Know
If your business sells groceries in Arkansas—whether you’re a grocery store, convenience store, or online retailer—you’ll need to prepare for this important sales tax change. While the state portion of the tax is being eliminated, local city and county taxes on food purchases will remain in effect. That means sellers still need to calculate and collect local taxes at the point of sale.
What’s Changing with Arkansas Grocery Sales Tax
The Big Shift: No More State Tax on Most Food
Starting January 1, 2026, Arkansas will drop its current 0.125% state sales and use tax on “food and food ingredients.” This includes:
- Substances sold for ingestion or chewing by humans
- Products consumed for taste or nutritional value
What’s Not Included
Some items will still be taxed at regular rates. These include:
- Candy
- Soft drinks
- Alcoholic beverages
- Tobacco
- Prepared food (i.e., hot meals or items ready for immediate consumption)
- Dietary supplements
Local Sales Tax Still Applies
The new law does not change municipal or county-level sales taxes. That means local jurisdictions in Arkansas can and will likely continue taxing groceries, including under existing enabling acts like the Arkansas Gross Receipts Act of 1941.
A special note: Texarkana's unique border-city 1% sales tax will continue to apply with separate rules.
What to Do If Your Business Sells Groceries in Arkansas
Action Items for Retailers and Sellers
- Update tax rate configurations in your point-of-sale and accounting systems to reflect 0% state sales tax on qualifying food items starting January 1, 2026.
- Review product classifications to make sure you’re distinguishing between food, prepared food, and taxable items like candy and soft drinks.
- Ensure proper local tax collection, as municipal and county taxes will still apply to grocery items.
- Stay ahead of rule changes by monitoring guidance from the Arkansas Department of Finance and Administration, which will issue implementing regulations.
How TaxValet Makes Grocery Tax Compliance Easy
Navigating Arkansas Tax Changes with TaxValet’s Help
At TaxValet, we handle the complex parts of sales tax compliance so you don’t have to. If you’re a TaxValet client, we’ll make sure your grocery product taxability is correctly mapped, your systems are up to date for the 2026 rule change, and you’re collecting and remitting the correct local taxes. That way, you can stay focused on growing your business—not on tracking legislative updates.
Not a client yet? Let’s fix that. Schedule a free consultation and see how we can take sales tax off your plate.