Overview of Arkansas Taxes
Arkansas taxpayers pay some of the highest sales tax rates in the country, while also having some of the lowest property tax rates. The state has a progressive income tax. Retired? Use our Retirement Income Tax Calculator.
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Your Income Taxes Breakdown
| Tax Type | Marginal Tax Rate | Effective Tax Rate | 2019 Taxes* |
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* These are the taxes owed for the 2019 - 2020 filing season.
Your 2019 Federal Income Tax Comparison
- Your marginal federal income tax rate
- Your effective federal income tax rate
- Your federal income taxes
Total Estimated 2019 Tax BurdenIncome Tax $ Sales Tax $ Fuel Tax $ Property Tax$ Total Estimated Tax Burden $ Percent of income to taxes = % | $ |
- About This Answer
Our income tax calculator calculates your federal, state and local taxes based on several key inputs: your household income, location, filing status and number of personal exemptions. Also, we separately calculate the federal income taxes you will owe in the 2019 - 2020 filing season based on the Trump Tax Plan.
How Income Taxes Are Calculated
- First, we calculate your adjusted gross income (AGI) by taking your total household income and reducing it by certain items such as contributions to your 401(k).
- Next, from AGI we subtract exemptions and deductions (either itemized or standard) to get your taxable income. Exemptions can be claimed for each taxpayer as well as dependents such as one’s spouse or children.
- Based on your filing status, your taxable income is then applied to the the tax brackets to calculate your federal income taxes owed for the year.
- Your location will determine whether you owe local and / or state taxes.
- Last Updated: January 1, 2020
When Do We Update? - We regularly check for any updates to the latest tax rates and regulations.
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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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Taxes in Arkansas
Arkansas State Tax Quick Facts
- Income tax: 0% - 6.90%
- Sales tax: 6.50% - 11.625%
- Property tax: 0.63% average effective rate
- Gas tax: 24.8 cents per gallon of regular gasoline, 28.8 cents per gallon of diesel
Residents of Arkansas face sales tax rates that are among the highest in the country. According to the Tax Foundation, the average sales tax rate in Arkansas in 2019 (including state and local taxes) is 9.43%, third highest in the U.S. On the other hand, homeowners in Arkansas pay the 10th lowest property taxes in the nation, at an average effective rate of just 0.63%.
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.
Arkansas Income Taxes
Tax rates are applied to net taxable income in Arkansas, which is total personal income adjusted for any deductions and exemptions. Taxpayers can claim either itemized deductions or the Arkansas standard deduction. Itemized deductions in Arkansas are similar to itemized deductions allowed by the IRS. For example, real estate taxes, charitable contributions, mortgage interest and investment interest are all deductible.
The standard deduction in Arkansas is lower than the federal standard deduction. For most filers, the deduction is $2,200. For married persons filing jointly, it is twice that amount.
In addition to the standard deduction, some types of income are exempt from taxation in Arkansas and may be subtracted from total income to calculate net taxable income. Like most states, Arkansas does not tax Social Security benefits. Active-duty military income is fully exempt, while enlisted persons receive a $9,000 exemption and retired military personnel receive a $6,000 exemption.
Although Arkansas does not have a personal exemption, it does have a personal tax credit that reduces tax liability by $23 for each filer and each dependent. Other Arkansas credits include the political contribution credit of up to $50 per year; the child care credit, which is equal to 20% of the federal child care credit; and the credit for adoption expenses, also 20% of the federal credit.
Arkansas Sales Tax
Arkansas has some of the highest sales taxes in the country. The statewide rate is 6.5%. However, along with that state rate, counties and cities collect their own sales taxes. These can total up to 5.125%, which means the total sales tax rates in some areas is as high as 11.625%. The table below shows rates for all counties and the largest cities in Arkansas. Note that the rates listed for counties include state and county rates only, while rates listed for cities include state, county and city rates.
For many types of food, the statewide rate is lowered to 1.5%, which means the total rate will be 5% lower than those listed above. Generally, food items that can be purchased in a grocery store and are intended for home consumption are subject to this lower rate. Prepared foods face the full rate and many localities levy additional taxes on restaurants.
Prescription medicine is entirely exempt from sales tax, as are sales of durable medical equipment such as wheelchairs, prosthetic devices or oxygen tanks.
Arkansas Property Tax
Looking at buying a house in the Natural State? The good news is that Arkansas' property taxes are some of the lowest in the country. The average effective property tax rate in Arkansas is just 0.63%, which is in the bottom 10 nationwide. That means that, on average, homeowners in Arkansas pay just 0.63% of their home’s value in property taxes each year.
Increases in property tax payments are limited by law. The assessed value of a property, which is the value on which taxes are based, cannot increase by more than 5% in a single year. That ensures that homeowners are not caught off-guard by unexpectedly large tax bills.
More good news for people looking to buy a home in Arkansas: Our mortgage guide can help make your homebuying process a bit easier. The guide includes information about mortgage rates and other details about getting a mortgage in Arkansas.
Arkansas Gasoline Tax
The gas tax in Arkansas is 24.8 cents per gallon of regular fuel. That is 34th highest among all states and D.C.
Arkansas Estate Tax
Arkansas has no estate or inheritance tax. Inheritance is exempt from the Arkansas income tax.
Arkansas Capital Gains Tax
Capital gains are taxable as personal income in Arkansas. That means you pay the same income tax rates as you do for other income in the state. Long-term capital gains receive an exemption of 30%, meaning that 30 cents of every dollar are not taxable. The exclusion does not apply to short-term capital gains, which are 100% taxable at regular income tax rates.
Arkansas Alcohol and Tobacco Tax
Arkansas has several sin taxes, including both a cigarette and alcoholic beverages tax. The cigarette tax is a relatively low $1.15 per pack, which ranks 34th across the country. The alcohol tax varies depending on the variety and alcoholic content of the beverage. Distilled spirits, which have an alcoholic content of at least 40%, are taxed at a rate of $7.73 per gallon. This is on top of regular sales taxes. Wine faces an excise tax of $1.44 per gallon, which is the 10th highest tax rate on wine in the U.S.
- Former president Bill Clinton was born in Hope and spent most of his childhood in Hot Springs.
- Walmart, the world’s third largest employer and largest retailer, is headquartered in Bentonville, Arkansas.
- There are two mountain ranges in Arkansas: the Ozarks and the Ouachita Mountains.
Places with the Lowest Tax Burden
Are you curious how your tax burden stacks up against others in your state? SmartAsset’s interactive map highlights the counties with the lowest tax burden. Scroll over any county in the state to learn about taxes in that specific area.
Methodology
Where you live can have a big impact on both which types of taxes you have to pay each year and how much money you spend on them. SmartAsset calculated the amount of money a specific person would pay in income, sales, property and fuel taxes in each county in the country and ranked the lowest to highest tax burden.
To better compare income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes.
In order to determine sales tax burden we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a county by the household income less income tax. This product is then multiplied by 35% to estimate the sales tax paid.
For property taxes, we compared the median property taxes paid in each county.
For fuel taxes, we first distributed statewide vehicle miles traveled down to the county level using the number of vehicles in each county. We then calculated the total number of licensed drivers within each county. The countywide miles were then distributed amongst the licensed drivers in the county, which gave us the miles driven per licensed driver. Using the nationwide average fuel economy, we calculated the average gallons of gas used per driver in each county and multiplied that by the fuel tax.
We then added the dollar amount for income, sales, property and fuel taxes to calculate a total tax burden. Finally, we created the Tax Burden Index in order to show how each county in the country compares to the county with the lowest tax burden (that is the county with a Tax Burden Index of 100).
Sources: US Census Bureau 2017 American Community Survey, Government Sources, Avalara, American Petroleum Institute, GasBuddy, UMTRI, Federal Highway Administration, SmartAsset
