Arkansas is known as the Natural State because of its natural beauty. Many retirees are choosing to make Arkansas home because of that beauty and the state's laid back lifestyle.
Arkansas Personal Income Taxes
The state of Arkansas charges an Individual Income Tax that applies to most forms of retirement income. The only retirement-income sources that are not are subject to income tax in Arkansas are Social Security and railroad retirement benefits.
There is a $6,000 deduction on employer sponsored pension plans in Arkansas. This means that the first $6,000 in pension income that a resident receives is not considered taxable income by the state. Persons can receive this deduction by listing the $6,000 on line 17A or 17B of their state tax return.
Arkansas residents over 59½ years old can deduct the first $6,000 in funds they take out of their IRAs and other retirement accounts. Persons would get this deduction using the same method.
All single Arkansas residents with an income of $10,682 a year or higher and married couples with an income of $18,012 a year must file a state income tax return. Taxpayers that make less than $50,000 a year will have to determine their income tax rate using the State Tax Tables. Those who make over $50,000 a year have to pay $2,621 or 7% of their adjusted gross income.
Arkansas Sales Tax
Arkansas has a statewide Sales and Use Tax of 6% that applies to most retail purchases in the state. There is also a reduced food tax of 1.5% that applies to most grocery purchases. This gives Arkansas one of the highest state sales tax rates in the nation.
In addition to these levies, Arkansas imposes a number of others that residents will have to pay. Persons who purchase alcoholic beverages are charged a state liquor excise tax of 3% in addition to the sales tax and federal liquor taxes. Beer drinkers pay a 1% beer tax. Most households will have to pay a utility tax of 2.75%. There is also a residential moving tax of 4.5% on persons who hire professional movers and a 2% parks and tourism tax on certain transactions.
More than 300 government entities charge local sales tax in Arkansas. Persons who order items via catalog or the internet should know that local sales tax will be due on delivery. Individuals could be charged local sales tax after paying for the item. You can determine local sales tax rates by looking them up with This tool.
Arkansas Property Taxes
Property tax rates in Arkansas are set by the county assessor and collected by the county government. Persons will have to contact their County Assessor's Office in order to determine what their property tax rate is.
Arkansas has a Real Estate Transfer Tax – a sales tax on real estate. The rate is $3.30 per $1,000 of assessed value. This tax is collected by the state.
Arkansas Capital Gains Tax
Any capital gain or loss listed on a federal tax return must be listed on the Arkansas state tax return because the state has a capital gains tax. 30% of capital gains are taxable in Arkansas. This includes gains from investment income. The first $250,000 in capital gains from the sale of a home is not taxed in Arkansas.
|Cost of Living Rank:||#4|
|Income Tax:||1.0% - 7.0%|