Overview of Arkansas Taxes
Arkansas utilizes a progressive income tax rate which is based on taxpayers’ income levels. This means the more you earn, the more you'll owe in taxes. All tax brackets are the same regardless of your filing status.
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Arkansas Paycheck Calculator
Arkansas Paycheck Quick Facts
- Arkansas income tax rate: 0% - 6.90%
- Median household income: $45,726 (U.S. Census Bureau)
- Number of cities that have local income taxes: 0
How Your Arkansas Paycheck Works
Arkansas residents have to pay taxes just like all U.S. residents. For federal income taxes and FICA taxes, employers withhold these from each of your paychecks. That money goes to the IRS, who then puts it toward your annual income taxes, Medicare and Social Security. The information on your W-4 is what your employer uses to figure out how much to withhold for federal taxes. That’s why you need to fill out a W-4 whenever you start a new job. You can also update your W-4 if your filing status changes (for example, if you get married) or if you have additional non-wage income that isn't subject to withholding.
Note that in early 2018, federal income tax rates changed because President Trump signed a new tax plan into law. The new rates mean that your paycheck's tax calculations changed slightly. There aren’t any more big changes planned for 2019, but it’s a good idea to check your W-4 at the start of the year to ensure all of the information you filled out is still correct. For 2020, though, the IRS has made revisions to the Form W-4.
More specifically, the new form removes allowances, and replaces it with an area where filers will enter dollar amounts for things like income tax credits, non-wage income, itemized and other deductions and total annual taxable wages. The new W-4 also uses a five-step process that allows filers to enter personal information, claim dependents and indicate any additional income or jobs.
Each of these updates will primarily affect anyone who is starting a new job or adjusting their withholdings. Employees hired prior to the beginning of 2020 aren’t required to complete the new form. However, anyone hired after Jan. 1, 2020 must fill it out. The tax return you file in April 2021 will contain any adjustments you’ve made to your withholdings this year.
One factor that affects how much federal tax is withheld from your paycheck is your marital status. Different tax brackets apply depending on your filing status, so your paycheck will also change with your filing status. Other factors affecting the size of your paycheck include the frequency of your pay periods and what deductions you’ve authorized your employer to make. For example, your employer will deduct money from each of your paychecks if you make contributions to retirement plans, such as a 401(k), or health plans, such as a health savings account (HSA).
Arkansas’ state income tax rates do not change based of your marital status. Instead, the state’s system is based on an individual’s income level. There are seven tax brackets with rates ranging from 0% on your first $4,500 up to a rate of 6.90% on income above $79,300.
If you’re a resident of Texarkana, Arkansas, you can claim the border city exemption. This means that any income you earn in Texarkana, if you’re a resident there, is exempt from Arkansas income tax. If you have a job outside this area, you will be subject to state taxes, though.
If you’re thinking about becoming a resident of the Natural State, or if you are considering refinancing a mortgage, take a look at our Arkansas mortgage guide for information on rates and details pertaining to each county.
A financial advisor in Arkansas can help you understand how taxes fit into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, homeownership, insurance and more, to make sure you are preparing for the future.
How You Can Affect Your Arkansas Paycheck
Arkansas residents can tweak their paychecks in a few ways. One way to do this is to ask your employer to withhold a certain amount from each paycheck. All you need to do for this is fill in the appropriate line on your W-4 with how much you want withheld. Depending on how much you overpay, you may get some of this extra money back come tax season. As a result, you might choose to do this if you tend to owe a lot when you file your taxes.
Making pre- and post-tax contributions is another way to alter your paycheck. Depending on your budget and priorities, adding more money to different options such as a Health Savings Account (HSA) or a commuter benefits program can help you save on some taxes. Other pre-tax deductions, like a 401(k), decrease your taxable income, which can lower what you owe the IRS in the end.
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the U.S. Zoom between states and the national map to see data points for each region, or look specifically at one of the four ranking factors in our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology To find the most paycheck friendly places for counties across the country, we considered four factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties, we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden, or greatest take-home pay.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment index that shows the counties with the lowest rate of unemployment. For income growth, we calculated the annual growth in median income throughout a five year period for each county and then indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one-half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number, so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2018 American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics
