Arkansas Tax Guide 2025
Explore Arkansas's 2025 state tax rates for income, sales, property, retirement, and more. Learn how Arkansas compares nationwide.
Navigating the complexities of state taxes can be daunting, but understanding Arkansas' tax landscape is essential for both residents and newcomers.
In this guide, we'll explore key components of The Natural State's tax system, from income and sales taxes to property taxes and retirement benefits.
Arkansas state tax: Overview
Taxes in Arkansas are a bit of a balancing act. Sales taxes run high, and income taxes tend to be above average, with rates varying based on how much you earn.
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On the bright side, property taxes are some of the lowest in the country.
And when it comes to estate planning, there is more good news. Arkansas doesn't have estate or inheritance taxes, so there is nothing extra to worry about when passing things on to loved ones.
[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
Arkansas income tax
Arkansas has a graduated state individual income tax ranging from 2% to 4.40%, according to the Tax Foundation.
Arkansas retirement taxes
Arkansas tax on retirement benefits: Social Security retirement benefits and Railroad Retirement benefits are tax-exempt.
Retirees age 59.5 or older can be exempt from the first $6,000 of an IRA distribution.
Up to $6,000 of income from private or government employer-sponsored retirement plans is also tax-exempt in Arkansas.
Military retirement pay is tax-exempt.
- Social Security: Not taxable
- 401(k) and IRA distributions: Taxable
- Pensions: Taxable (military pensions are tax-exempt)
Arkansas sales tax
Arkansas has a 6.5% state sales tax rate. Localities can add as much as 6.125% to the state's tax rate, according to the Sales Tax Handbook.
- Groceries: Taxable
- Clothing: Taxable
- Prescription drugs: Exempt
How much are property taxes in Arkansas?
In Arkansas, the average effective property tax rate is 0.53%, according to the Tax Foundation.
Arkansas Property Tax Breaks for Retirees
Age 65 Property Tax Relief: Residents 65 or older who qualify for the homestead exemption may also have the assessed value of their property frozen.
- Construction and "substantial improvements" may cause the assessed value of the property to increase.
- People with disabilities may qualify for the freeze regardless of age.
Arkansas gas tax
Gasoline | $0.22 per gallon |
Diesel | $0.23 per gallon |
Source: Sales Tax Handbook
Arkansas taxes on alcohol and tobacco
Product | Tax Amount |
|---|---|
Cigarettes | $1.15 per pack |
Other Tobacco Products | 68% of wholesale price |
Medical Marijuana | 10.50% |
Source: Sales Tax Handbook
Product | Tax Amount |
|---|---|
Wine | $0.75 per gallon |
Beer | $0.23 per gallon |
Liquor | $2.50 per gallon |
Source: Sales Tax Handbook
Arkansas estate and inheritance taxes
Arkansas does not have an estate or inheritance tax.
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