print order a reprint
See All Tools


Tool | August 2013

State-by-State Guide to Taxes on Retirees

Untitled Document

Arkansas

View State Compare List
(0) selected | Compare up to 5

The Bottom Line
Map of Arkansas

TAX-FRIENDLY

The Natural State is a low-cost, low-tax retirement destination. It exempts Social Security benefits and up to $6,000 of retirement income from its state income tax. All other income is taxed on a sliding scale ranging from 1% to 7%, and those rates will drop slightly starting in 2014. The statewide sales tax increased from 6% to 6.5% on nonfood items on July 1, 2013; food is taxed at 1.5%. Arkansas's real estate taxes are among the lowest in the nation.

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.

Social Security

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.

Property Taxes

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.

Inheritance and
Estate Taxes

There is no inheritance tax or estate tax.

You can get valuable updates from Kiplinger sent directly to your email. Simply enter your e-mail address and click "sign up".

More Sponsored Links


Advertisement

Market Update

Advertisement

Advertisement
Get valuable updates from Kiplinger directly to your e-mail

Featured Videos From Kiplinger