Arkansas Collects State Income Tax on Wages and Most Other Income

Yes, Arkansas has a state income tax. The state taxes wages, salaries, interest, dividends, capital gains, and most other forms of income. Unlike some states that tax only specific types of income, Arkansas applies its tax broadly to residents and part-year residents who earn money within the state.

The tax is progressive, meaning the rate increases as your income rises. Arkansas has six tax brackets, ranging from 2% on the lowest incomes to 5.75% on the highest. The exact amount you owe depends on your filing status and total income for the year.

Key Takeaways

  • Arkansas taxes most forms of income at rates between 2% and 5.75%, with higher earners paying higher percentages.
  • You must file a state return if you earned income in Arkansas and meet the income thresholds set by the state, even if you do not owe federal tax.
  • Social Security benefits are not taxed by Arkansas, and certain retirement income may may have access to for partial or full exemptions.
  • The Arkansas Department of Finance and Administration handles state income tax collection and publishes current tax forms and rates each year.
  • If you moved to or from Arkansas during the year, you may file as a part-year resident and only pay tax on income earned while living in the state.

Arkansas Tax Brackets and Rates for 2024

Arkansas uses six tax brackets. The lowest bracket starts at 2% for single filers with taxable income under $4,300, and the rate climbs to 5.75% for income over $27,000. Married couples filing jointly have higher income thresholds before moving into each bracket, but the top rate remains 5.75%.

These brackets adjust slightly each year for inflation. The Arkansas Department of Finance and Administration publishes updated brackets in January, so the exact dollar amounts change annually. You can find the current year's brackets on the department's website or on your state tax form instructions.

Your actual tax bill also depends on deductions and credits you claim. Arkansas allows a standard deduction (which varies by filing status) or itemized deductions, similar to federal tax. Some taxpayers also may have access to for credits that reduce their final tax owed.

Who Must File a State Return in Arkansas

You must file an Arkansas state return if your income exceeds the filing threshold for your situation. The threshold depends on your age, filing status, and type of income. A single person under 65 with only wages typically must file if gross income exceeds around $2,900, though this amount changes yearly.

Part-year residents—people who moved into or out of Arkansas during the tax year—must file if they meet the income threshold. You report only the income you earned while living in Arkansas on your state return. You will need to show the date you moved and your income for each period.

Even if you do not owe federal tax, you may still owe Arkansas tax, or vice versa. The two systems have different rules and thresholds, so do not assume one return covers both.

Income That Arkansas Does Not Tax

Arkansas excludes Social Security benefits from state income tax entirely. If Social Security is your only income, you will not owe Arkansas state tax on it. This applies to retirement, survivor, and disability benefits paid by the Social Security Administration.

Certain types of retirement income also receive favorable treatment. Military pensions and some other government pensions may be partially or fully exempt, depending on when you retired and your age. The rules are specific, so check the current year's instructions or contact the Arkansas Department of Finance and Administration if you receive a pension.

Interest from certain bonds and some other specialized income sources may also be exempt. The state tax form instructions list all exemptions for the current year.

How to File Your Arkansas State Return

You can file your Arkansas return on paper or electronically. Paper forms are available from the Arkansas Department of Finance and Administration website or by mail. The important date is the same as the federal important date—typically April 15, though it shifts if that date falls on a weekend or holiday.

Electronic filing through approved software or a tax professional is often faster and reduces errors. Many free filing options are available if your income is below a certain threshold. The IRS Free File program and the Arkansas Department of Finance and Administration website both list providers that offer no-cost filing.

If you cannot file by the important date, you can request an extension from the federal government, which also extends your Arkansas filing important date. However, an extension to file is not an extension to pay—any tax owed is still due by April 15, or you will owe interest and penalties.

Deductions and Credits Available in Arkansas

Arkansas allows you to claim either the standard deduction or itemize your deductions, just as you do on your federal return. The standard deduction amount varies by age and filing status and is adjusted each year. If you itemize on your federal return, you can also itemize on your Arkansas return, though the state may not allow all the same deductions.

Several credits can reduce your Arkansas tax bill. The state offers credits for child and dependent care, education expenses, and other situations. Some credits are refundable, meaning you can receive money back even if you owe no tax; others only reduce what you owe.

The tax form instructions for your filing status list all available credits and explain how to claim them. If you use tax software or a professional, these credits are usually calculated automatically.

What to Do If You Owe or Are Owed a Refund

If you owe Arkansas state tax, you can pay online, by mail, or through a payment plan. The Arkansas Department of Finance and Administration website has a payment portal where you can pay by bank transfer or credit card. Paying by credit card may include a processing fee.

If you are owed a refund, the state typically issues it within four to six weeks of receiving your return, though electronic filing and payment may speed this up. You can check the status of your refund on the department's website using your Social Security number and the amount of your refund.

If you filed on paper and have not received your refund after six weeks, contact the Arkansas Department of Finance and Administration. Keep a copy of your return and proof of mailing for your records.

Frequently Asked Questions

Do I have to pay Arkansas income tax if I work in Arkansas but live in another state?

Yes, Arkansas taxes income earned within the state, even if you live elsewhere. You would file as a nonresident and report only the income you earned in Arkansas. You may also owe tax to your home state, depending on its rules. Some states have reciprocal agreements to avoid double taxation, so check both states' requirements.

Is there a penalty if I file late?

Yes. Arkansas charges a failure-to-file penalty and a failure-to-pay penalty if you do not file by the important date or do not pay the tax owed by April 15. The penalties are calculated as a percentage of the unpaid tax and increase the longer you wait. Filing an extension request before the important date stops the failure-to-file penalty but not the failure-to-pay penalty.

Can I claim my spouse as a dependent on my Arkansas return?

No. You cannot claim your spouse as a dependent on any tax return. If you are married, you file jointly or separately, but your spouse is never listed as a dependent. Dependents are children, parents, or other relatives who meet specific relationship and income tests.

What if I moved to Arkansas mid-year and only earned part of my income here?

File as a part-year resident and report only the income you earned while living in Arkansas. You will need to show the date you moved into the state. Your standard deduction and tax brackets may be adjusted based on the number of months you lived in Arkansas, so follow the part-year resident instructions on the tax form.

Where do I send my paper tax return?

Mail your return to the address listed in the current year's tax form instructions. The Arkansas Department of Finance and Administration publishes a specific mailing address each year. Include your payment if you owe tax, and keep a copy for your records. Do not send cash—use a check or money order.