Arkansas has some of the most progressive income tax rates in the country, but the state also offers a number of deductions that help lower your tax burden. These include the standard deduction, mortgage interest, and investment interest. However, it’s important to understand how the different rates affect your specific situation before filing your taxes.
In 2024, the top Arkansas marginal individual income tax rate will be 4.7% for single filers and 4.4% for married filing jointly (MFJ) taxpayers. This is a two-point reduction from the rate that was in place for the tax year 2023. The state’s tax rate is based on net taxable income, which is total personal income less the amount of itemized deductions and exemptions.
In addition to the Arkansas individual income tax, the state’s residents pay a 6.5% sales tax, and local governments can add up to an additional 3.125% of that rate. Social Security retirement benefits are tax-exempt, as are military and private pensions. Other types of retirement income are taxed at different rates.
Arkansas Tax Brackets for 2024
| Tax Rate | Income Range | Taxes Due |
|---|---|---|
| 0.0% | $0 – $5,299 | 0.0% of Income |
| 2.0% | $5,300 – $10,599 | $0 + 2.0% over $5,299.99 |
| 3.0% | $10,600 – $15,099 | $105 + 3.0% over $10,599.99 |
| 3.4% | $15,100 – $24,999.99 | $240.00 + 3.4% over $15,099.99 |
| 4.9% | $25,000 – $100,000 |
Arkansas Income Tax Brackets Update
Arkansas’ state income tax rates last changed two years ago. Arkansas tax brackets are the same for single filers and married couples filing jointly, unlike the federal income tax, which has different tax brackets for each of these categories. Unlike the federal tax code, Arkansas does not have a personal exemption or dependent deduction. Instead, it has a tax credit for certain types of expenses, like the child care and adoption expense credits.
Understanding your Arkansas state tax liability is important because it is often one of the biggest annual costs you face as a working individual. A financial advisor can help you see how your state taxes fit into your overall financial picture and develop strategies to reduce your taxable income