Arkansas Bars Federal Bonus Depreciation Deductions
Arkansas taxpayers cannot claim federal bonus depreciation on state returns following a recent court ruling.
Updated on Oct. 29, 2026 in Taxes
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The Arkansas Supreme Court ruled that state residents cannot claim federal bonus depreciation deductions on their Arkansas state tax returns. This decision clarifies that state law does not incorporate this specific federal tax benefit.
Why it matters
The ruling confirms that Arkansas tax law does not adopt federal bonus depreciation, meaning taxpayers cannot use this deduction to lower their state-level tax liability. This resolution provides a definitive interpretation for how business-related assets are treated under state tax codes.
The ruling impacts all Arkansas taxpayers seeking to apply federal bonus depreciation, a deduction not recognized by current state tax law. The case originated from a dispute involving a Texas-based partnership, though the decision applies broadly to state tax returns.
The players
Arkansas Supreme Court
The highest judicial authority in the state responsible for interpreting tax statutes and administrative law.
Arkansas Department of Finance and Administration
The state agency that manages tax collection, compliance, and enforcement for Arkansas residents.
Randall and Tia Risor
Taxpayers who previously sought to claim bonus depreciation on their state returns through their Texas-based partnership.
The details
The Arkansas Supreme Court interpreted state tax statutes to exclude federal bonus depreciation, effectively overruling a previous circuit court decision that had permitted taxpayers Randall and Tia Risor to claim the benefit. Because Arkansas has not adopted this specific federal tax provision, businesses and individual taxpayers cannot carry over the federal deduction to reduce their state taxable income. This confirms that taxpayers must calculate state depreciation based solely on Arkansas tax law requirements.
Timeline
The Arkansas Supreme Court issued the tax ruling on October 29, 2026.
Money Landscape
This decision reinforces the distinction between federal tax incentives and state-level adoption. It highlights how federal bonus depreciation, while available at the national level, remains subject to specific state legislative approval.
Arkansas taxpayers who have claimed federal bonus depreciation on past state returns should consult a qualified tax professional to evaluate if an amended return is necessary. This ruling affects how you calculate depreciation on business assets for state tax reporting moving forward.
The takeaway
The Arkansas Supreme Court has clarified that state law does not allow for federal bonus depreciation deductions. Taxpayers should review their previous filings and consult with a tax professional to ensure their current state tax reporting aligns with this definitive legal interpretation.
Further reading
For more on managing state-specific obligations, see the Taxes section.
Source note: This article includes information reported by Bloomberglaw.
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