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Arkansas Estate Tax

arkansas estate tax

Arkansas does not levy an estate tax. The federal government does have an estate tax, though, and Arkansas residents may be subject to that if the value of their estate is high enough. This guide is for residents of The Natural State who are starting to think about estate planning and want to make sure everything is taken care of when they are gone. If you want help with estate planning or another financial planning matter, finding a financial advisor could be helpful.

Arkansas Estate Tax

Arkansas has no estate tax. It is one of 38 states without a state-level estate tax.

What Is the Estate Tax?

The estate tax – sometimes referred to as the “death tax” – is a tax levied on the estate of a person who is recently deceased. It is applied before the money has been passed on to a person’s heirs and is only relevant for estates that reach a certain threshold.

The inheritance tax is different from the estate tax. Beneficiaries are responsible for paying inheritance tax on the money or assets they receive, whereas the estate of the deceased is responsible for paying estate taxes.

Arkansas Inheritance and Gift Tax

arkansas estate tax

Arkansas also has no inheritance tax. Inheritance laws of other states may apply to you, though, if you inherit money or assets from someone who lives in a state that has an inheritance tax. The Pennsylvania inheritance tax, for instance, applies to out-of-state inheritors. If you receive an inheritance from someone living out-of-state, make sure to check the local laws in your grantor’s state to see if you owe inheritance tax.

Arkansas also has no gift tax. The federal gift tax exclusion is $18,000 per gift recipient for gifts in 2024, up from $17,000 in 2023. If you give more than that amount to any one person in a given year, you must report it to the IRS. Any amount gifted over the exclusion also counts against your lifetime gift tax exemption of $13.61 million and decreases your federal estate tax exemption, described below.

Federal Estate Tax

Arkansas doesn’t have an estate tax, but the federal estate tax may still apply. The federal estate tax exemption is $13.61 million in 2024, up from $12.92 million in 2023. Married couples can transfer their exemption to each other. This means that, with the right legal maneuvers, a married couple’s estate is protected to up to $25.84 million when the second spouse dies.

If your estate exceeds the exemption, the tax rate is progressive. The top tax rate is 40%. This is how it works: Let’s say you have an $20.43 million estate and no spouse. Subtract the $13.61 million exemption, and you are left with a taxable estate of $6.82 million. Looking at the chart, you are in the top bracket, with a base payment of $345,800 on the first $1 million. Then, apply the 40% tax rate on the remaining $5.82 million. That comes to $2.382 million. Add to that the $345,800 base payment and your total estate tax burden is $2,673,800.

Federal Estate Tax Rates

Taxable Estate*Base Taxes PaidMarginal RateRate Threshold**
$1 – $10,000$018%$1
$10,000 – $20,000$1,80020%$10,000
$20,000 – $40,000$3,80022%$20,000
$40,000 – $60,000$8,20024%$40,000
$60,000 – $80,000$13,00026%$60,000
$80,000 – $100,000$18,20028%$80,000
$100,000 – $150,000$23,80030%$100,000
$150,000 – $250,000$38,80032%$150,000
$250,000 – $500,000$70,80034%$250,000
$500,000 – $750,000$155,80037%$500,000
$750,000 – $1 million$248,30039%$750,000
Over $1 million$345,80040%$1 million

*The taxable estate is the total above the 2024 federal exemption of $13.61 million.
**The rate threshold is the point at which the marginal estate tax rate kicks in.

Overall Arkansas Tax Picture

arkansas estate tax

Arkansas is a fairly tax-friendly state for retirees. The state does not tax Social Security income. It does partially tax withdrawals from retirement accounts, like 401(k) plans and IRAs. The same is true for income from private or public pensions.

Income tax in Arkansas is progressive, with a top rate of 4.7%. Property taxes in Arkansas are fairly low in comparison to the rest of the nation, with an effective rate of just 0.62%.

Estate Planning Tips

  • Estate planning can be complex, so you may want some help from a professional. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • There are a number of options for how to plan your estate, including wills and living trusts. Your financial advisor can help you figure out which is the best choice for you.
  • It’s important to take inventory of all of your income sources when planning your estate. This ensures that you have an accurate picture of how much money you may be passing on. It may not be much, but you will likely be getting Social Security checks in retirement. Find out how much you’ll likely receive annually with SmartAsset’s Social Security calculator.

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