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.
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Your Income Taxes Breakdown
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* These are the taxes owed for the 2022 - 2023 filing season.
Your 2022 Federal Income Tax Comparison
- Your marginal federal income tax rate
- Your effective federal income tax rate
- Your federal income taxes
Total Estimated 2022 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 2020 - 2021 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, 2021
When Do We Update? - We regularly check for any updates to the latest tax rates and regulations.
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Taxes in Arkansas
Arkansas State Tax Quick Facts
- Income tax: 2% - 5.50%
- Sales tax: 6.50% - 12.625%
- Property tax: 0.57% average effective rate
- Gas tax: 24.50 cents per gallon of regular gasoline, 28.50 cents per gallon of diesel
Residents of Arkansas face sales tax rates that are among the highest in the country. The combined sales tax rate in Arkansas in 2022 (including state and local taxes) is 9.47%, third-highest in the U.S. On the other hand, homeowners in Arkansas pay some of the lowest property taxes in the nation, at an average effective rate of just 0.57%.
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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 at $4,400.
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. Military income is also fully exempt from state taxes.
Although Arkansas does not have a personal exemption, it does have a personal tax credit that reduces tax liability by $29 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 6.125%, which means the total sales tax rates in some areas is as high as 12.625%. 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 0.125%. 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 0.61%. That means that, on average, homeowners in Arkansas pay just 0.57% of their home’s value in property taxes each year.
Increases in property tax payments are limited by law. The assessed value of a homestead 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 24.5 cents per gallon of regular gasoline and 28.5 cents per gallon of diesel.
Arkansas Estate Tax
Arkansas has no estate or inheritance tax. Inheritances is also 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 50%, meaning that 50 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. 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 $2.50 per gallon. Beer is taxed at a rate of $0.24 per gallon and wine is taxed at a rate of $0.75 per gallon.
- 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.
