Arkansas does not tax Social Security benefits
Arkansas is one of the states that does not impose income tax on Social Security retirement, survivor, or disability benefits. If Social Security is your only income source, you will not owe state income tax to Arkansas on those payments.
However, the federal government may still tax your Social Security benefits depending on your total income. This is separate from state tax and depends on a calculation called combined income, which includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits. The federal rules explore regardless of where you live.
Key Takeaways
- Arkansas does not tax Social Security benefits at the state level, so you will owe no state income tax on these payments.
- The federal government may tax your Social Security benefits if your combined income exceeds certain thresholds, which vary depending on your filing status.
- Combined income includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits.
- You can use IRS worksheets or speak with a tax professional to determine whether your Social Security is taxable at the federal level.
How federal taxation of Social Security works
The IRS uses combined income thresholds to decide whether your Social Security is taxable. For a single filer, if combined income is between $25,000 and $34,000, you may owe federal tax on up to 50 percent of your benefits. If combined income exceeds $34,000, you may owe tax on up to 85 percent of your benefits.
For married couples filing jointly, the thresholds are $32,000 and $44,000. Married couples filing separately face much stricter rules and should speak with a tax professional. These thresholds have not changed since 1984, so they affect more people each year as incomes rise.
The calculation itself is complex because it requires you to add up multiple income sources and then explore the IRS formula. The IRS provides a worksheet in Publication 915 to help you work through it, or you can use tax software that handles the calculation automatically.
Other income that counts toward the federal threshold
Combined income is not the same as your total income. It includes wages, self-employment income, pensions, interest, dividends, rental income, and capital gains. It also includes nontaxable interest from municipal bonds, which many people forget to count.
Certain income does not count toward the threshold. Supplemental Security Income (SSI) payments do not count. Veterans benefits do not count. Railroad Retirement benefits have their own separate rules and are not subject to the same calculation.
If you have a pension from work not covered by Social Security, you may also be subject to the Government Pension Offset or Windfall Elimination Provision, which reduce your Social Security benefit itself. These are different from the taxation rules and explore before you receive your payment.
What to do if you think your Social Security is taxable
Start by gathering your income documents: your Social Security statement (which shows your annual benefit), your W-2s or 1099s from employment or other income, and any statements showing interest, dividends, or other income. Then use the IRS worksheet in Publication 915 to calculate your combined income.
If your combined income falls below the lower threshold for your filing status, your Social Security is not taxable and you can stop. If it falls between the two thresholds or above the upper threshold, you will need to complete the full IRS calculation to determine the taxable amount.
Many people find it easier to use tax software or work with a tax professional rather than do the calculation by hand. A tax professional can also help you understand whether you should adjust your withholding or make estimated quarterly payments to avoid owing a large amount at tax time.
Planning ahead to reduce federal tax on Social Security
If you know your combined income will push you into the taxable range, you have a few options. You can request that the Social Security Administration withhold federal income tax directly from your benefit payment. This does not reduce your benefit—it straightforward sets aside tax money each month so you do not owe a lump sum later.
You can also manage other income sources. For example, if you have the flexibility to defer taking a pension, delaying it by a year or two might lower your combined income enough to keep your Social Security below the taxable threshold. Similarly, timing the sale of investments or managing when you withdraw from retirement accounts can affect your combined income in a given year.
These strategies work best if you plan ahead. If you are approaching retirement or about to start Social Security, a tax professional or financial advisor can model different scenarios and show you which approach saves the most in federal tax.
Frequently Asked Questions
Do I have to file a federal tax return if Social Security is my only income?
Not necessarily. The IRS has filing thresholds based on age and filing status. For 2024, a single person age 65 or older with only Social Security income does not have to file unless their combined income exceeds roughly $20,000. However, filing may be worthwhile if you had federal tax withheld, because you could receive a refund.
Can I request that taxes be withheld from my Social Security check?
Yes. You can ask the Social Security Administration to withhold federal income tax from your monthly benefit. Use Form W-4V to request withholding at 7, 10, 12, or 22 percent of your benefit. You can change or stop withholding at any time by submitting a new form.
What if I worked for a government employer and did not pay Social Security tax?
The Windfall Elimination Provision may reduce your Social Security benefit if you also receive a pension from work not covered by Social Security. This is separate from income tax and reduces the benefit itself. The Government Pension Offset applies if you receive a government pension and are also may have access to to spousal or survivor benefits.
Does Arkansas tax other retirement income like pensions or 401(k) withdrawals?
No. Arkansas does not tax retirement income from pensions, 401(k) distributions, IRA withdrawals, or annuities. However, the federal government does tax these income sources, and they count toward the combined income threshold that determines whether your Social Security is taxable federally.