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Arkansas Tax Guide: Income Brackets & Filing

Navigate Arkansas income tax brackets, sales tax rates, and property tax rules for the 2025 tax year.

3.9%
Top Income Tax Rate
9.47%
Combined Sales Tax
0.62%
Property Tax Rate
#38
Tax Burden Rank

Tax Overview

Arkansas has been actively working to reduce its income tax rates in recent years, making the state more competitive with its neighbors. The state uses a progressive income tax system with rates that have been steadily declining. As of 2025, the top marginal rate has been reduced to 3.9%, down from 5.9% just a few years earlier, with further reductions planned.

Sales tax in Arkansas is among the highest in the nation. The state rate of 6.5% combines with local taxes to create an average combined rate exceeding 9.4%. Arkansas does tax groceries, though at a reduced state rate of 0.125%. This high combined sales tax rate is one of the primary tax burdens for Arkansas residents, particularly those with lower incomes.

Property taxes in Arkansas are quite low, ranking among the bottom ten states nationally. The effective rate is approximately 0.62%, and the state offers homestead credits that further reduce the burden for owner-occupied properties. Arkansas also exempts most retirement income from state taxation, including Social Security benefits, making it reasonably attractive for retirees despite the high sales taxes.

Income Tax

Arkansas has been steadily reducing its top rate, which dropped from 5.9% to 3.9% over recent years. Further reductions may be enacted.

Income RangeTax Rate
$0 – $4,4000%
$4,401 – $8,8002%
$8,801 – $13,2003%
$13,201 – $22,0003.4%
$22,001 +3.9%

Sales Tax

State Rate6.50%
Avg. Local Rate2.97%
Combined Rate9.47%

Property Tax

Effective Rate0.62%
Median Annual Bill$878

Key Deductions in Arkansas

  • ✓Standard deduction of $2,340 (single) or $4,680 (married filing jointly)
  • ✓Homestead property tax credit for owner-occupied homes
  • ✓Retirement income exclusion (up to $6,000 per person)
  • ✓Military retirement pay exemption
  • ✓Charitable contribution deductions
  • ✓Early childhood program tax credit

Filing Information

Filing Deadline: April 15

Tax Authority: Arkansas Department of Finance and Administration

Phone: (501) 682-1100

Website: https://www.dfa.arkansas.gov

Frequently Asked Questions

Is Arkansas reducing its income tax rates?
Yes, Arkansas has been on a multi-year path to lower income tax rates. The top rate dropped from 5.9% to 3.9% in recent legislative sessions, and further reductions may be implemented depending on state revenue performance.
Does Arkansas tax groceries?
Arkansas taxes groceries at a reduced state rate of 0.125%, which is much lower than the standard 6.5% state rate. However, local sales taxes still apply to grocery purchases at their full rates.
Is Social Security taxed in Arkansas?
No, Social Security benefits are fully exempt from Arkansas state income tax. Additionally, up to $6,000 per person of other retirement income (such as pensions and 401(k) distributions) can be excluded.
What is the homestead tax credit?
Arkansas offers a homestead property tax credit that provides a tax reduction on the first $350 of assessed value for owner-occupied homes. This credit is automatically applied when you file your homestead exemption.

Neighboring State Guides

MissouriTennesseeMississippiLouisianaTexasOklahoma

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