Tool | | November 2017

State-by-State Guide to Taxes on Retirees


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The Bottom Line
Map of Arkansas

Not Tax-Friendly

The Natural State exempts Social Security benefits and up to $6,000 of retirement income from its state income tax. But note that income that exceeds these breaks runs into pretty steep taxes. And although Arkansas's real estate taxes are among the lowest in the nation, its sales taxes—which are levied on food as well—are near the top. A plus for veterans: Starting Jan. 1, 2018, all military pension income will be tax-exempt.

State Sales Tax

6.5% state levy. Localities can add as much as 5.125%, and the average combined rate is 9.3%, according to the Tax Foundation. The state taxes food at 1.5%, and localities can add to that.

Income Tax Range

Low: 0.9% (on up to $4,299 of taxable income)

High: 6.9% (on more than $35,100 of taxable income, if your total income exceeds $75,000)

Effective income tax rate: 4.2%/individual, 6.2%/joint

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

Railroad Retirement benefits are exempt. Up to $6,000 in 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. Military pensions are fully exempt starting Jan. 1, 2018


Qualifies for exemption of up to $6,000.

401(k)s and other Defined-Contribution Employer Retirement Plans

Qualifies for exemption of up to $6,000.

Private Pensions

Qualifies for exemption of up to $6,000.

Public Pensions

Qualifies for exemption of up to $6,000.

Property Taxes

Median property tax on Arkansas's median home value of $114,000 is $693.

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.

Vehicle Taxes

The state sales tax on vehicle purchases over $4,000 is 6.5% (7% for Texarkana residents). Sales below that threshold are tax-free. A local property tax is also levied annually on a car’s assessed value. Rates are set at the county level. For example, in Little Rock you pay $64.30 per $1,000. The tax on a $30,000 vehicle would be $1,929.

Inheritance and Estate Taxes

There is no inheritance tax or estate tax.