State Taxes at a Glance – Arkansas
|Type of Tax||2022|
|Individual Rates||2.00% to 4.90%|
|Corporate / Business Tax Rates||5.50% (5.30% starting in 2023)|
|Gross Receipts Tax||None|
|Sales Tax||9.47% (average)|
|Property Taxes||0.64% as a percentage of primary home|
|Estate or Inheritance Tax||None|
State Income Taxes in Arkansas
The state of Arkansas does have an individual income tax. Like most states with income tax, it is calculated on a marginal scale. The Governor recently passed a bill that lowered both the individual and corporate tax rates to compete with other states. The individual rates now range from 2.00% to 4.90% for 2022.
Please note* – in the state of Arkansas, there are different tax brackets if you make more than $84,500, from individuals that make less.
State Business Taxes in Arkansas
The state of Arkansas has a business income tax. Arkansas’ state tax is calculated on a marginal scale whose range is from 1.0% to 5.50% for 2022. Business entities that are flow-thru entities, such as S Corporations, Partnerships, LLCs, etc., are taxes at the individual tax rates. In other words, the 5.50% tax rate is accessed only on C Corporations.
Capital Gains Tax Exemptions in Arkansas
50% of your net Long Term Capital Gains is tax exempt in the state of Arkansas. In addition, net capital gains in excess of $10 million is also exempt.
There is no Capital Gains exception for Short Term Capital Gains in Arkansas.
Sales and Property Taxes in Arkansas
Sales Taxes in Arkansas – Like many states, Arkansas has multiple sales tax rates. One at the state level and another at the local level. The state rate is 6.50% the average local rate is 2.97% (total average rate for Arkansas Sales Tax is 9.47%).
Property Taxes in Arkansas – the average property tax rate for residential property in the state of Arkansas is 0.64%, which is below the national average of 1.08%.
Payroll Taxes in Arkansas
Unemployment taxes usually consist of three factors. They are the wage base, the range of UI rates, number of schedules. Below is an outline of the three:
- Wage Base – Arkansas has a wage base of $10,000
- UI Rates – range from 0.30% to 14.30% (which is a high maximum)
- Schedules – Arkansas has a single schedule
- New Employers – All new employers are assessed a tax rate of 3.2% for the first three years of operations
Arkansas DMV Registration Fees
Arkansas DMV fees are based on the value of your vehicle (Ad Valorem Taxes). Every county calculates the Ad Valorem Tax differently. On average it’s calculated by multiplying the value of your vehicle x 20% and your automobile’s milage. You can go to the online DMV website to renew your registration and get information to provide to your CPA for your taxes.
Like most states you are presumed to be a resident of Arkansas if spend more than 6 months in aggregate in the State.
State Tax on Social Security Benefits
Even though Arkansas has an income tax, social security benefits are not subject to state tax in “The Natural State.”
Franchise Tax in Arkansas
Arkansas is one of a few states that has a Capital Stock tax, commonly referred to as a Franchise. Depending on your business entity, the Franchise Tax is assessed differently. Here’s a chart:
|Entity||Franchise Tax 2022|
|Corporation with Stock||0.3% of outstanding stock ($150 min)|
|Corporation without Stock||$300|
|Insurance Corporations||$300 – $400|
|Mortgage Loan Corporations||0.3% of outstanding stock ($300 min)|
When you register your business with the State of Arkansas, you pay a one-time registration fee of $50
Here is a link to the Secretary of State of Arkansas’ website – click here