Arkansas Taxes

Personal Income Tax:

The Arkansas personal income tax is similar to the federal income tax system, and ranges up to 7 percent of net taxable income. Taxpayers who receive an IRA distribution after reaching the age 59.5 don't have to pay tax on the first $6,000 from the account. Premature distributions made on account of the participant’s death or disability also qualify for the exemption.

Arkansas Sales Tax:

Arkansas levies a 5.125 percent Transaction Privilege (sales) tax. Many Arkansas cities and counties levy additional local sales taxes. These are collected by the state, which distributes the money back to the local jurisdictions monthly.Low-income taxpayers with a total annual household income of less than $12,000 are permitted a sales tax exemption for electricity usage. An application for this exemption must be filled with your designated electric company before the exemption can be actuated by the state.

Sales of alcoholic beverages account for added taxes. A 10 percent supplemental mixed drink tax is imposed on the sale of alcoholic beverages (excluding beer) at restaurants. A 4 percent tax is due on the sale of all mixed drinks (except beer and wine) sold for "on-premises" consumption. And a 3 percent tax is due on beer sold for off-premises consumption.

Personal and real property taxes:

Political subdivisions, including counties, cities and school districts, collect taxes on real property (such as a house or land) and personal property (automobiles, pickup trucks, recreational vehicles, boats and motors, motorcycles and all-terrain vehicles). These ad valorem taxes are based according to item value only. Assessment is based on 20 percent of the true market value for real property and on 20 percent of the usual selling price for personal property.

The Arkansas Homestead Property Tax Refund Act allows a refund to some low-income residents who are 62 years old or older; disabled persons as defined in Title XIX of the Social Security Act; or non-service connected disabled veterans who own and reside in their homes. The refund is for part or all of their real estate taxes paid up to $300 and income limits apply.

Estate and Inheritance Tax:

Estates are taxed based on the federal estate tax law. The Arkansas tax equals the credit allowed for state death taxes on the federal estate tax return. Since the Arkansas tax is completely offset, there is no additional tax due. There is no inheritance tax.