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Arkansas Taxes

The State of Arkansas is sensitive to business and industry and works hard to maintain a fair and equitable tax system. As a result, Arkansas’ overall per capita tax burden is among the lowest in the nation.

A major indicator of a state’s business climate is its tax structure. This section contains information on most of the taxes which apply to businesses. It includes information on taxes levied by the state, counties and the city

Summary of Rates

6.5%

Effective Corporate

7.0%

Personal Income

Maximum Rate

8.5%

Sales and Use

Combined State, Local and City

3.8%

Unemployment Insurance

3%

Corporate Franchise

City and County Taxes

Property Tax

The State of Arkansas does not have a property tax. However, Arkansas cities and counties do collect property tax, which is the principle local source of revenue for funding public schools. The tax is calculated based on 20% of the market value of real and personal property and the average annual value of merchants’ stocks and/or manufacturers’ inventories based on millage rates in individual school districts. Business firms and individuals are subject to annual property tax on all real and personal property. 

Additional tax information may be found here: /www.arkansasedc.com/data/taxation.

Cities

  • five mills – general municipal government support – all cities.
  • five mills – retirement bonds issued for municipal improvements – first and second class cities (First class cities include those with 2,500 or more inhabitants; second class cities, 500 to 2,500 inhabitants).
  • five mills – retirement of bonds issued for acquiring, improving, or construction water and light plants – first and second class cities.
  • five mills – development of industry – first class cities located in counties with no less than 105,000 inhabitants.
  • two mills – firemen and policemen pension funds (one mill each) – first and second class cities.
  • one mill – maintenance of public library – first class cities of 5,000 or more population. (Cities levying city library millage are exempt from the millage levied by counties for a county library).

Personal Property Tax

  • The State of Arkansas levies no ad valorem taxes on real or personal property, having reserved that field of taxation to counties, municipalities and school districts. Property is assessed at 20% of market value.

Counties

  • five mills – general county government operation
  • five mills – retirement of bonds issued for capital improvements
  • three mills – construction and maintenance of roads and bridges
  • five mills – development of industry (limit of five mills for the city and county combined)
  • one mill – maintenance of county library
  • one mill – county hospital operation

Junior College Districts

  • ten mills – capital outlay

Additional Information:

Starting A New Business in Arkansas: A Tax Guide For New Businesses

Moving to Arkansas: A Concise Tax Guide for New Residents

State Taxes

Corporate Income Tax

Domestic corporations and all foreign corporations doing business in the state are subject to tax on the net income at the following rates:

  •      First    $3,000:  1%
  •      Next     $3,000:  2%
  •      Next     $5,000:  3%
  •      Next     $14,000:  5%