Tool | August 2013
State-by-State Guide to Taxes on Retirees
State Sales Tax
6.5% (prescription drugs are exempt). Food is taxed at 1.5%; city and county sales taxes can add up to another 5.5%.
Income Tax Range
Low: 1% (on up to $4,099 of taxable income)
High: 7% (on more than $33,999 of taxable income)
Note: The low tax rate will drop to 0.9% on January 1, 2014. The high rate will drop to 6.9% starting in 2015.
Benefits are not taxed.
Exemptions for Other Retirement Income
Veterans Administration benefits, Workers' Compensation, Tier I and Tier II Railroad Retirement benefits, and unemployment compensation are exempt. Up to $6,000 in military, civil-service, state and local government, and private pensions is exempt. The exemption refers to income from public or private retirement systems, plans and programs. IRA distributions qualify for the $6,000 exemption if the taxpayer is 59 1/2 or older. Out-of-state government pensions also qualify for the exemption.
Arkansas property taxes are levied by counties, municipalities and school districts. All households are eligible for a homestead tax credit of up to $350, regardless of income or age. The assessed value is based on 20% of the true market value. Median property tax on the state's median home value of $102,900 is $532, according to the Tax Foundation.
Tax breaks for seniors: The taxable assessed value of homes of residents 65 or older, or those who are disabled, is capped at the previous year's value unless improvements are made or the property is sold.
There is no inheritance tax or estate tax.
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