Arkansas state tax rates
Arkansas assesses an individual income tax, using six tax brackets ranging from 1 percent to 7 percent. Its tax system is designed along the U.S. income tax system and generally adopts most of its tax provisions. More on Arkansas taxes can be found in the tabbed pages below.
Personal income tax
Arkansas collects income taxes from its residents at the following rates.
- 1 percent on the first $4,099 of taxable income.
- 2.5 percent on taxable income between $4,100 and $8,199.
- 3.5 percent on taxable income between $8,200 and $12,199.
- 4.5 percent on taxable income between $12,200 and $20,399.
- 6 percent on taxable income between $20,4000 and $33,999.
- 7 percent on all taxable income more than $34,000.
In 2003, the state enacted a 3 percent individual income tax surcharge on all residents of Texarkana, both the portion of the city within Arkansas’ border as well as that within Texas. Residents are allowed certain income tax exemptions under Arkansas’ claiming the state’s Border City Exemption. Arkansas state tax returns are due April 15, or the next business day if that date falls on a weekend or holiday. Taxpayers who receive an individual retirement account distribution after reaching the age 59½ don’t have to pay tax on the first $6,000 from the account. Premature distributions made on account of the participant’s death or disability also qualify for the exemption.
Arkansas’ gross receipts (sales) tax and compensating (use) tax rate was increased March 1, 2004, to 6 percent (from the previous 5.125 percent). Effective July 1, 2004, the state also mandated that various services be subject to sales tax collection. They include wrecker and towing services; dry cleaning and laundry; body piercing, tattooing and electrolysis; pest control; security and alarm monitoring; self-storage facilities; boat storage and docking; and pet grooming and kennel services. In addition to the state sales tax, there are more than 300 local taxes in Arkansas. Cities and counties have the authority to enactadditional local sales and use taxesif they are passed by the voters in their area. You can find your local sales and use tax rates at the Office of Excise Tax Administration’sLocal Tax Lookup Tool. Since 2008, sales of services in Texarkana that were previously exempted in accordance with Texas law have been subject to Arkansas state and local sales tax if the service is subject to tax in Arkansas. On July 1, 2009, the tax rate on sales of food and food ingredients was cut to 2 percent.
Personal and real property taxes
Political subdivisions, including counties, cities and school districts, collect taxes on real property (such as a house or land) and personal property (automobiles, pickup trucks, recreational vehicles, boats and motors, motorcycles and all-terrain vehicles). Property tax records are managed by the assessor of each Arkansas county. These ad valorem taxes are based according to item value only. Assessment is based on 20 percent of the true market value for real property and on the usual selling price for personal property. The tax due is calculated as the assessed value times the local millage rate. Personal property must be assessed each year before May 31 (without penalty). The taxable assessed value of homesteads will not increase more than 5 percent above the previous taxable assessed value except when new additions or substantial improvements are made to the property. However, the taxable value of the homestead will continue to increase each year until it equals 20 percent of market value. Taxes are due by Oct. 10 of the following year. You can find your local assessor by consulting the state map of counties. Property taxes can be paid online. Arkansas homeowners may receive up to a $350 property tax credit on their homesteads. Eligibility for the credit is confined to a homeowner’s principal place of residence. Nursing home or retirement center residents who own a home are also eligible for the credit, as are people who have deeded their homes to others while retaining a right to live in it until they die (a life estate). Contact your local assessor’s office for details. In certain cases, disabled veterans are exempt from all state taxes on real and personal property. This tax exemption also is available to widow or widowers who do not remarry, as well as to dependent minor children of military personnel who were killed in action, died of service-related disabilities or who are missing in action. More information is available from the Arkansas Department of Veterans Affairs website. Arkansas Department of Finance and Administration website.