Arkansas Tax: Guide to Income, Sales, Property, and Retirement Taxes

Arkansas Flag for Arkansas state tax guide

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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

picture of downtown Little Rock, Arkansas

Arkansas has a graduated state individual income tax ranging from 2% to 4.40% for 2025 returns (2% to 3.9% for 2026), 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

Still life of a small shopping cart with $1 USD bills

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 (Exempt in 2026) Arkansas will stop charging state sales tax on groceries and basic food ingredients as of January 1, 2026. However, these items will still be subject to local taxes.
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.

Beginning in 2026: Arkansas has expanded the eligibility for disabled veteran property tax relief. Homes owned by a trust of an LLC can qualify for the disabled veteran property tax exemption if the veteran or an eligible surviving family member lives in the home.

Arkansas gas tax

rendering of a yellow car against a yellow background

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Gasoline	$0.22 per gallon
Diesel	$0.23 per gallon

Source: Sales Tax Handbook

Arkansas taxes on alcohol and tobacco

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Arkansas tobacco taxes
Product	Tax Amount
Cigarettes	$1.15 per pack
Other Tobacco Products	68% of wholesale price
Medical Marijuana	10.50%

Source: Sales Tax Handbook

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Arkansas alcohol taxes
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.

Katelyn has more than 6 years of experience working in tax and finance. While she specialized in tax content while working at Kiplinger from 2023 to 2024, Katelyn has also written for digital publications on topics including insurance, retirement, and financial planning and had financial advice commissioned by national print publications. She believes knowledge is the key to success and enjoys providing content that educates and informs.