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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
Related Content
-
Four Spa Retreats for Well-Heeled RetireesWe hand-picked these U.S. spa retreats for their serenity, amenities and dedication to the comfort of older travelers. All are located in the Continental U.S.
-
Four Military Benefits That Have Helped My FamilyMilitary life can be challenging for servicemembers and their families, but they're offered some significant financial benefits to help cushion the blow.
-
The Original Property Tax Hack: Avoiding The ‘Window Tax’Property Taxes Here’s how homeowners can challenge their home assessment and potentially reduce their property taxes — with a little lesson from history.
-
Social Security Tax Limit Rises Again: Who Pays More in 2026?Payroll Taxes The Social Security Administration has announced significant changes affecting millions as we approach a new year.
-
Three Critical Tax Changes Could Boost Your Paycheck in 2026Tax Tips The IRS predicts these tax breaks may change take-home pay in 2026. Will you get over $1,000 in tax savings?
-
Trump’s 2025 Tax Bill: What’s Changing and How It Affects Your TaxesTax Law From standard deduction amounts to tax brackets and Medicaid cuts, here’s what individual filers need to know about tax changes in Trump's so called "big beautiful bill."
-
The Rubber Duck Rule of Retirement Tax PlanningRetirement Taxes How can you identify gaps and hidden assumptions in your tax plan for retirement? The solution may be stranger than you think.
-
RMDs, Roth, and SS: Test Your Knowledge of Retirement Tax RulesQuiz Don't let the IRS catch you off guard. Take our quiz to reveal common retirement tax rules that could save (or cost) you thousands.
-
IRS Updates 2026 Tax Deduction for People Age 65 and OlderTax Changes Adjustments to the extra standard deduction can impact the tax bills of millions of older adults. Here are some new amounts to know for 2026.
-
IRS Reveals New 2026 Child Tax Credit and other Family Credit AmountsTax Credits Key family tax breaks are higher for 2026, including the Earned Income Tax Credit and the Adoption Credit. Here's what they're worth.
