Arkansas tax guide
Arkansas has undergone significant tax reform in recent years, shifting toward a more simplified, lower-rate progressive income tax model. By condensing brackets and reducing the top rate to 3.90%, the state aims to attract talent and increase the monthly take-home pay of its workforce. While residents benefit from no local income taxes, they should remain mindful of the varying local sales taxes that can influence overall cost of living.
Key tax highlights
Payroll
- Arkansas recently reduced its top marginal income tax rate to 3.90% to enhance economic competitiveness.
- The state maintains a simplified two-bracket progressive system for individual income tax calculations.
- Employers are required to withhold Arkansas state income tax from employee paychecks based on official withholding tables.
Local taxes
- Arkansas allows cities and counties to levy local sales taxes, but there is no additional local income tax imposed on residents' wages.
- Local option sales taxes can vary significantly across municipalities, often reaching up to 3% on top of the base state rate.
Deductions
- Arkansas offers a standard deduction that automatically applies to individual income tax returns.
- Certain contributions to Arkansas-qualified 529 college savings plans may provide specific tax benefits to residents.
- Taxpayers can take advantage of specific credits, such as the Arkansas Working Family Tax Credit, which can reduce overall tax liability.
Salary examples
Pre-computed take-home estimates at common salary levels. For example, a $75,000 salary in Arkansas yields about $58,755 after all deductions (78.3% take-home rate). Use the calculator above with your actual salary to see your specific estimate.
| Salary | Federal | State | FICA | Take-Home | Rate |
|---|---|---|---|---|---|
| $50,000 | $3,820 | $1,863 | $3,825 | $40,493 | 81.0% |
| $75,000 | $7,670 | $2,838 | $5,738 | $58,755 | 78.3% |
| $100,000 | $13,170 | $3,813 | $7,650 | $75,367 | 75.4% |
| $150,000 | $24,734 | $5,763 | $11,475 | $108,028 | 72.0% |
Neighboring states
How Arkansas compares with border states on income tax. At a $75,000 salary, a Arkansas worker pays $2,838 in state tax annually.
Tax tips for Arkansas
- Review your W-4 form annually to ensure your Arkansas withholding is accurate, especially if your income level crosses into the 3.90% bracket.
- Check the Arkansas Department of Finance and Administration website to see if you qualify for the Working Family Tax Credit.
- Utilize Arkansas-sponsored 529 plans if you are saving for education, as these can offer state-level tax incentives.
- Keep records of your medical expenses, as they may be deductible under specific Arkansas state tax provisions.
Did you know?
- •Arkansas's top marginal tax rate of 3.90% is significantly lower than that of its neighbor, Oklahoma, which peaks at 4.75%.
- •Unlike many states, Arkansas provides a unique 'low-income tax table' that can eliminate income tax liability for eligible lower-earning taxpayers.
Filing guidance
Arkansas individual income tax returns are typically due by April 15th, coinciding with the federal filing deadline. Taxpayers should utilize the state's 'ARTax' portal for electronic filing, which is the most efficient way to ensure accurate calculation of liabilities based on the current two-bracket system. Always ensure your state withholding information is updated with your employer whenever you experience a change in your filing status or a significant salary adjustment to avoid underpayment penalties.
Relocation context
Comparing Arkansas with nearby states can reveal whether paycheck differences are driven by state tax, local tax, or payroll deductions.