Arkansas Taxes

A major indicator of the state's business climate is its tax structure. Arkansas maintains a fair and pro-business tax system.

Arkansas Taxes                                        

Corporate Income 1.0 - 6.5%

Personal Income 1.0 - 7.0%

Sales and Use 6.0%

Corporate Franchise 0.27%

Unemployment Insurance for New Business 3.3%

Existing AR Businesses 2.0%

Arkansas is among the states with the lowest per capita tax burden.

A. Corporate Charter and Franchise Tax

The Arkansas franchise tax is an annual tax imposed upon domestic corporations for the grant of charter privileges and upon foreign corporations for the privilege of doing business in the state.

Domestic for-profit corporations pay a charter fee and initial franchise tax upon filing articles of incorporation. The franchise tax is calculated by  multiplying the number of outstanding capital shares by the par value (if no par stock value, $25 is used) of those shares, then multiplying by 0.0027.Corporations with no authorized capital stock pay an annual tax of $100 regardless of valuation. No corporation shall pay less than $50 or more than $1,075,000. After the initial payment, the franchise tax is due June 1 of each year.

B. Corporate Income Tax

All corporations doing business in the state, whether foreign or domestic, are subject to tax on net income. The rates are as follows:

Pursuant to the Multi-State Tax Compact, income derived from both within and without Arkansas is apportioned for taxation according to the percent of property and payrolls utilized in the state and sales attributable to Arkansas.

A net operating loss can be deducted from gross income and carried forward for a total period of five years succeeding the year of such loss. Operating steel mills may carry forward the loss for ten years.

Accounting Methods

A corporation must calculate its Arkansas income tax liability using the same accounting method for State income tax purposes as for Federal purposes.

For additional Corporate Income Tax information, contact:

Corporation Income Tax Section,  PO Box 919
Little Rock, Arkansas 72203-0919
(501) 682-4775

Income Tax Withholding

Employers are required to withhold Arkansas individual income taxes on all employees who perform services for an employer doing business in, or deriving income from sources in Arkansas. An employer should request a registration packet from the Arkansas Withholding Section upon hiring the first employee. The packet contains; an employer registration statement, a withholding chart and instructions, and Arkansas Withholding Exemption Certificates. The employer should complete the registration forms and return them with the required Federal Employer Identification Number (FEIN). (To obtain a FEIN, you may request this form by telephone by calling 1-800-829-3676).

For more Employer’s Responsibility information, contact:

Revenue Division
Withholding Tax Unit, Room 225, PO Box 8055
Little Rock AR 72203-9941
(501) 682-2212

 

C. Real Estate Personal Property Tax

The state has no property tax, but taxes on property are levied annually by cities and counties. The assessed value of real and personal property is arrived at taking 20 percent of the market value.

Tax rates are as follows:

RUSSELLVILLE TAX RATES

Based in mills

D. Personal Income Tax

Individuals, estates and trusts residing within Arkansas or deriving income from within the state, and non-residents deriving income from within the state are subject to a state income tax. The rates on net taxable income are as follows:

 A credit is allowed resident individuals for the amount of income tax paid to any other state not to exceed what the tax would be on out-of-state income if added to the Arkansas income and calculated at Arkansas income tax rates. The following personal tax credits are allowed:

Single Individuals $20

Blind or Deaf, additional $20

Blind and Deaf, additional $40

Head of Household $40

Dependants with gross income of less than $3000       $20

Fiduciaries $20

65 or older head of household $40

Spouse 65 or older, additional $20

Credit for "developmentally disabled" dependant in home $500

E. Sales and Use Tax

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