Sales Tax on Cleaning Services in Arkansas (2025)

Arkansas Split the Baby in 2023: Residential Cleaning Came Off the Tax Rolls

For years, Arkansas taxed cleaning services broadly under Ark. Code Ann. §26-52-301(3)(D) and its implementing regulation, 26 CAR §30-506, which defines "cleaning services" as ridding the interior or exterior of a building of dirt, impurities, or extraneous matter. Then, in the 2023 regular session, the legislature passed HB1195, amending the statute to specifically exclude cleaning and janitorial services performed at residential property from the sales tax base, effective the first day of the calendar quarter following enactment. Commercial and nonresidential cleaning stayed fully taxable. If you run a mixed book, residential house cleaning and commercial janitorial contracts under the same LLC, you now have to split your invoicing logic by property classification, not just by service type.

The regulation carves out a few other edges worth knowing. Pool cleaning is explicitly taxable under 26 CAR §30-506. Street and sidewalk cleaning is generally not treated as a taxable cleaning service. And food-processing sanitation mandated by USDA regulation is excluded from the "cleaning services" definition entirely, so a business that cleans meat-processing equipment under federal sanitation mandates is not collecting sales tax on that specific scope, even though the same crew doing general office cleaning down the street would be.

Arkansas Cleaning Service Taxability by Property and Scope

Filing Mechanics and the DFA Relationship

Arkansas cleaning businesses register and file through the Department of Finance and Administration (DFA), and the state rate is 6.5 percent before local county and city add-ons, which frequently push the combined rate close to 9.5 percent in urban areas like Little Rock or Fayetteville. The residential exemption does not eliminate your registration requirement if you still run commercial accounts; DFA expects a single combined sales tax account to track both taxable and exempt lines, with residential cleaning revenue reported as exempt sales rather than simply omitted from the return. Omitting exempt sales from the total gross receipts line is a common mistake that triggers a mismatch letter from DFA's compliance division, since your bank deposits and 1099-K totals from payment processors will not reconcile with a return that shows a lower gross receipts figure than what actually moved through the business.

For questions specific to how a mixed residential/commercial contract should be coded, DFA's sales tax section can be reached at (501) 682-7104. Get the classification confirmed in writing for any borderline account, particularly HOA-managed common areas, which sit in a gray zone between residential and commercial depending on ownership structure.

Worked Example: Splitting a $10,000 Book Between Residential and Commercial

Say your $10,000 monthly revenue splits $4,000 residential and $6,000 commercial, servicing accounts inside Little Rock where the combined state and local rate is 9.0 percent. The $4,000 residential portion is exempt under the post-HB1195 rule, so no tax is collected on that revenue. The $6,000 commercial portion is fully taxable: $6,000 × 0.09 = $540 in sales tax collected and remitted to DFA. Your commercial clients pay $6,540 total; your residential clients pay the flat $4,000 service fee with no tax line at all. If your billing software still applies a blanket tax rate across all invoices from a pre-2023 configuration, you are either over-collecting from residential clients (a refund liability and a customer relations problem) or under-collecting from commercial clients (a DFA assessment risk). Audit your invoice templates against the property classification before your next filing period.

The Supplies Trap That Catches Growing Companies

Because 26 CAR §30-506(f) denies cleaning businesses a resale exemption on their own operating supplies, mops, chemicals, uniforms, vacuum equipment, you are paying sales tax on those purchases at your local supplier's counter regardless of whether the underlying service is taxable or exempt. This surprises operators who assume that because their end product (a cleaning service) might be exempt for residential clients, their inputs should be exempt too. They are not related exemptions. A company that scaled its supply purchasing through a wholesale account without a resale certificate on file is not violating any rule, because no such certificate would apply here in the first place, but a company that mistakenly obtained one anyway and stopped paying tax on supplies has created a liability that DFA will find on the first vendor cross-check audit. Keep supply purchases taxed at the point of sale and treat that as a fixed cost of doing business in Arkansas, not a pass-through waiting to be recovered.

This state is a full member of the Streamlined Sales Tax Governing Board, which changes the practical compliance picture in a way the statute alone does not convey. Member states file annual taxability matrices and certify definitions against a common agreement, so a service classification here should line up with the same classification in the other member states. For a cleaning company expanding into neighboring markets, that consistency is worth using deliberately: the matrix is the fastest way to confirm whether a scope taxable in Arkansas carries the same treatment across the border.

How DFA Audits a Mixed Residential/Commercial Book

When the Department of Finance and Administration audits a cleaning company with both residential and commercial revenue, the examiner's first request is typically a client list segmented by property type, cross-referenced against the exempt sales reported on the return. A residential client billed through a business address, an HOA-managed unit, or a short-term rental property can each raise a classification question that the plain language of HB1195 does not answer definitively, since the amendment focused on typical owner-occupied residential cleaning rather than every conceivable property arrangement that might loosely be called residential. Keep a written classification note on file for any account that does not clearly fall into a simple homeowner-occupant category, along with the reasoning for how you coded it, since that documentation is what turns a defensible judgment call into a sustained position during audit rather than an assessed deficiency.

Arkansas also expects registered businesses to update their account information whenever their service mix shifts meaningfully, for example if a company that started purely residential begins taking on its first commercial contracts. DFA's registration system does not automatically recognize this transition, so the responsibility sits with the taxpayer to begin collecting on the new commercial revenue stream from the first invoice, not from whenever the company gets around to updating its DFA account details.