Interest, dividends and capital gains from funds invested in the Achieving a Better Life Experience Program (program) are exempt from Arkansas corporate and personal income taxes. A qualified distribution from a disability savings account is exempt with respect to the designated beneficiary’s income. However, a nonqualified distribution is subject to tax to the party, account owner, or designated beneficiary who actually makes the withdrawal. Earnings on a contribution that are included in a refund are taxable if the account owner receives a refund of contributions to the account because (1) of the death or disability of the beneficiary or (2) the beneficiary receives a scholarship, allowance or payment described in IRC §135(d)(1)(B) or (C). The law provides applicable definitions. The program becomes effective when the treasurer determines that federal regulations regarding the program as provided under the Tax Increase Prevention Act of 2014 (Pub. L. No. 113-295) have been finalized and provide the guidance necessary to implement the program.
Act 1238 (H.B. 1239), Laws 2015, effective as noted above