Home State Tax Arkansas Tax

Arkansas Tax

FULL List to Arkansas Tax Forms

Individual Income Tax Forms

Form AR1000CR Individual Income Tax Composite Return 

Form AR1000F Individual Income Tax Return 

Form AR1000NR Individual Income Tax Return Non Resident

Form AR1000S Individual Income Tax Return Resident Short Form

Corporate Income Tax Forms

Form AR1100CT Corporation Income Tax Return

Form AR1100CTX Amended Corporation Income Tax Return

Sales Tax Forms

Exemption Form

Form Arkansas Consumer Use Tax Return

Primary Concerns:

The most significant recent issues that have effected taxation in Arkansas has been centered heavily on increasing unemployment taxes that many businesses now pay, due to the increasing amounts of state residents seeking unemployment benefits.

Arkansas’s taxation also has an interesting history in trying to regulate both alcohol and cigarette use by demanding fairly high tax rates on both forms of product.

Income Taxes:

All residents of Arkansas or non-residents who draw income from businesses, employment, trusts, or properties located within the state are required to pay Arkansas income tax on their income.

Those with taxable income of $3,700 or less pay a 1% income rate.  The rate for incomes between $11,100 and $18,600 is 4.5%, while between $18,600 and $31,000 the rate is 6%.

Instead of having recognizing returns that are classified as being single, filing jointly or head of household, Arkansas offers tax credits for these classifications.

Corporate Income Taxes:

All businesses and corporations that either reside in Arkansas or do business in state are subject to Arkansas income taxes.  This can seem somewhat complicated, but becomes clearer when explained.

The first $3,000 of corporate income have a tax rate of 1%.  What this means is, if an Arkansas business earned $6000 in income for a year, the entire $6000 will NOT be taxed as 2%, only the second $3000.

From there the next $5000 earned will be 3%, the next $14,000 will be at 5%, the next $75,000 will be at 6%, and any income over $100,000 will be taxed at 6.5%.  Everything $100,000 and under will be prorated at the lower rate (All of the previous brackets add up to $100,000: $3,000 + $3,000 + $5,000 + $14,000 + $75,000 = $100,000).

Corporations with a sustainable net operating loss may carry it forward for five years as a deduction.

Property Taxes:

Property taxes in Arkansas are generally operated on a county by county basis. The state does not set or collect property taxes; taxes are set and collected by the county of residence (and Arkansas has 75 counties).  In general, Arkansas counties usually tax most property no matter the purpose or use.

This includes vehicles, which are taxed at their assessed value, which is usually 20 percent of market value multiplied by the mileage rate (which varies from county to county).

Sales Taxes:

The standard Arkansas state sales tax is 6%, and it is fairly standard across the state on most saleable items.  Many municipalities add additional sales taxes on top of these rates; the city of Little Rock adds an additional half percent to its sales tax.

Because of its history as a “dry” state, meaning that many counties have historically placed restrictions on alcohol sales (with many counties still doing so), the state has a comprehensive listing of various tax rates on alcohol beverage purchases, with beer commanding a 1% sales tax, while mixed drinks boast a whopping 10% sales tax.


The state of Arkansas, like any other state in the United States, needs to generate revenue to fund different programs and services that are essential for the well-being of the community. Also, the state needs to maintain its infrastructure and provide support for the less fortunate. One way to achieve this is through taxes. Arkansas tax system comprises of different taxes imposed on its residents, including income tax, sales tax, property tax, and other taxes. In this article, we will explore each of Arkansas’s major taxes, how they affect the residents, and the recent changes in the laws governing them.

Overview of Arkansas Tax

Arkansas tax system comprises of state and local taxes that generate revenue for the state’s general fund and the city or country’s coffers. The state’s general fund is responsible for providing funds for different programs and services, including education, healthcare, public safety, and other essential services. Local taxes, on the other hand, are collected by the cities and counties to fund their budgets and provide programs and services to their residents.

Arkansas has a three-bracket progressive tax rate that ranges from 0.9% to 6.6%. The state’s general sales tax is 6.5%, with local jurisdictions able to add up to an additional 5.125% tax. Arkansas property taxes are relatively low compared to other states, with the average effective property tax rate standing at 0.63%, making it the fourth-lowest in the country.

Arkansas’s major tax sources include income tax, sales tax, property tax, and other taxes like excise taxes, fuel taxes, and cigarette taxes.

Arkansas Income Tax

Arkansas income tax is a progressive tax system that ranges from 0.9% to 6.6%, depending on an individual’s income. The state has three tax brackets, with the first bracket taxed at 0.9%, the second bracket taxed at 2.4%, and the third bracket taxed at 6.6%. The tax brackets are adjusted annually for inflation.

Arkansas income tax applies to all forms of income, including salaries, wages, tips, dividends, interest, capital gains, and other forms of income. The state’s income tax is an essential source of revenue for the state’s general fund, generating approximately $4.2 billion in 2019.

Arkansas Sales Tax

Arkansas sales tax is one of the primary sources of revenue for the state and local jurisdictions. The state’s general sales tax is 6.5%, with local jurisdictions able to add up to an additional 5.125% tax, bringing the total sales tax to 11.625%. The average sales tax rate in Arkansas is 9.34%, making it the second-highest in the country.

Like other states, Arkansas exempts certain items from sales tax, including groceries, prescription medicine, and some agricultural inputs. The state also provides a sales tax exemption for manufacturing and industries to encourage investment and job creation in the state.

Arkansas Property Tax

Arkansas property taxes are relatively low compared to other states, with the average effective property tax rate standing at 0.63%, making it the fourth-lowest in the country. Property taxes in Arkansas are levied by local governments, including cities, counties, and school districts. The tax rate varies depending on the local jurisdiction and the value of the property.

Arkansas property tax revenue is an essential source of funding for local governments, generating approximately $1.5 billion in 2019. The revenue is used to fund various local programs and services, including education, public safety, infrastructure, and other essential services.

Other Taxes

Apart from income tax, sales tax, and property tax, Arkansas imposes other taxes on its residents, including fuel tax, cigarette tax, and excise tax. The state imposes a fuel tax of $0.24 per gallon of gas and $0.28 per gallon of diesel. Arkansas cigarette tax is $1.15 per pack of 20 cigarettes, making it the fourth-lowest in the country. The state also imposes excise taxes on different goods and services, including alcohol, gaming, and insurance premiums.

Recent Changes in Arkansas Tax Laws

Like any other state, Arkansas tax laws are subject to change, depending on the state’s financial situation and the needs of the residents. In recent years, Arkansas has made some significant changes in its tax laws, affecting how residents are taxed and the amount of revenue the state generates. Below is a summary of the recent changes in Arkansas tax laws.

Income Tax Cuts

In 2019, Arkansas Governor Asa Hutchinson signed a bill that reduced the state’s individual income tax rates. The bill reduces the tax rates for the first two tax brackets, with the first bracket now taxed at 0.9%, down from 2%. The second bracket is now taxed at 2.4%, down from 4%. The reductions in tax rates are expected to save taxpayers approximately $97 million annually.

Sales Tax on Online Purchases

In 2019, Arkansas Governor Asa Hutchinson signed a bill that requires online retailers to collect sales tax on purchases made by Arkansas residents. The bill was intended to level the playing field between online retailers and local businesses that were subject to sales tax. The bill is expected to generate approximately $35 million in revenue annually.

Property Tax Exemption for Disabled Veterans

In 2019, Arkansas Governor Asa Hutchinson signed a bill that provides a property tax exemption to disabled veterans and their surviving spouses. The bill waives property taxes for veterans who are 100% disabled due to a service-connected disability. The exemption applies to the veteran’s primary residence and is expected to cost the state approximately $1 million annually.

Fuel Tax Increase

In 2019, Arkansas Governor Asa Hutchinson signed a bill that increased the state’s fuel tax by $0.03 per gallon of gas and $0.06 per gallon of diesel. The tax increase was intended to generate revenue for the state’s highways and transportation infrastructure. The tax increase is expected to generate approximately $95 million annually.

Conclusion

In conclusion, Arkansas tax system comprises of different taxes that generate revenue for the state and local jurisdictions. The state’s major tax sources include income tax, sales tax, property tax, and other taxes like excise taxes, fuel taxes, and cigarette taxes. In recent years, the state has made some significant changes in its tax laws, affecting how residents are taxed and the amount of revenue the state generates. The changes include income tax cuts, sales tax on online purchases, property tax exemption for disabled veterans, and fuel tax increase. The changes are expected to make the state’s tax system fairer, generate more revenue for the state, and provide relief to the less fortunate.