Arkansas has undergone aggressive tax reform in recent years. The most recent overhaul — SB 8 (2023 special session) — restructured the tax from 3 brackets (2–4.4%) to 5 brackets from 0% to 3.9%, one of the most significant rate cuts in the state's history. A further special session in May 2026 (HB 1001/SB 1) cut the top rate again, to 3.7%, retroactive to January 1, 2026. Arkansas now has one of the lowest income tax rates in the South.
Why the cuts? Arkansas's Republican-led legislature passed multiple rounds of tax cuts (2019, 2021, 2022, 2023, and again in a May 2026 special session) to make the state competitive with neighboring zero-tax states (Texas, Tennessee) and attract businesses and residents from high-tax states. Governor Sarah Huckabee Sanders has pushed for further reductions toward a flat tax.
How it compares:
Recent reform history: Top rate dropped from 6.9% (2019) → 5.9% (2021) → 4.9% (2022) → 4.4% → 3.9% (2023 SB 8) → 3.7% (May 2026 special session, HB 1001/SB 1, retroactive to Jan 1, 2026). At $100K income, residents now pay $3,212 state tax (3.21% effective rate), down from over $5,800 under the old rates.
Source: Arkansas Department of Finance and Administration - Tax Rates
Note: These are marginal rates — you only pay the higher rate on income within each bracket.
Here's what Arkansas residents actually pay at different income levels (2026, single filer, standard deduction):
| Annual Income | Federal Tax | State Tax | Total Tax | Take-Home Pay | Effective Rate |
|---|---|---|---|---|---|
| $50,000 | $3,820 | $1,362 | $9,007 | $40,993 | 18.0% |
| $75,000 | $7,670 | $2,287 | $15,695 | $59,305 | 20.9% |
| $100,000 | $13,170 | $3,212 | $24,032 | $75,968 | 24.0% |
| $150,000 | $24,734 | $5,062 | $41,271 | $108,729 | 27.5% |
| $250,000 | $51,304 | $8,762 | $75,580 | $174,420 | 30.2% |
Note: Includes federal and state income tax only. Does not include FICA (Social Security/Medicare), which adds 7.65% for employees.
Key takeaway: At $100K, Arkansas takes $3,212 in state tax alone.
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Migration Trends: According to U.S. Census Bureau data (2021-2022), Arkansas experienced net inmigration of 14,782 residents - a significant shift from historical outmigration. Top origin states were:
Why people move here:
Why people leave:
Tax considerations if moving here:
| State | Tax Rate | Tax on $100K Income | Difference from Arkansas |
|---|---|---|---|
| Arkansas | 0-3.7% | $3,212 | Baseline |
| Texas | 0% | $0 | −$3,212 (save) |
| Tennessee | 0% | $0 | −$3,212 (save) |
| Oklahoma | 0-4.5% | $3,955 | +$743 (higher) |
| Louisiana | 3% flat | $2,625 | −$587 (save) |
Key insight: Arkansas's 3.7% top rate (post-SB 8, further cut by a May 2026 special session) is very competitive. Texas/Tennessee save $3,212/year at $100K with 0% income tax. Oklahoma charges more ($3,955). Louisiana is now cheaper ($2,625) — Louisiana replaced its old graduated 1.85-4.25% brackets with a flat 3% rate via a 2024 constitutional amendment, effective 2025, a bigger change than the Arkansas figure alone reflects.
The total picture:
Arkansas's income tax ranges from 0% to 3.7% across 5 progressive brackets. The brackets are: 0% up to $5,599; 2% from $5,600–$11,199; 3% from $11,200–$15,999; 3.4% from $16,000–$26,399; and 3.7% over $26,400. At $100K income, you pay approximately $3,212 state tax (3.21% effective state rate). SB 8 (2023 special session) originally restructured the prior 3-bracket 2–4.4% system into these 5 brackets with a 3.9% top rate; a May 2026 special session (HB 1001/SB 1) cut the top rate further to 3.7%, retroactive to January 1, 2026.
Arkansas has passed multiple rounds of income tax cuts since 2019. SB 8 (2023 special session) restructured from 3 brackets (2–4.4%) to 5 brackets (0–3.9%), adding a 0% bottom bracket and reducing the top rate to 3.9%. A May 2026 special session (HB 1001/SB 1) cut the top rate again, to 3.7%, retroactive to January 1, 2026, funded by an estimated $334 million projected state revenue surplus. Republican legislators have funded the cuts through strong state revenue growth, federal pandemic aid, and economic expansion. The goal: compete with neighboring zero-tax states (Texas, Tennessee) and attract businesses and residents from high-tax states.
Arkansas: $3,212 state income tax at $100K (3.7% top rate, 3.21% effective). Texas: $0 income tax. Texas saves $3,212/year on income tax alone. However, Texas property tax averages 1.40% vs Arkansas 0.56%. On a $250K home, Texas charges $3,500/year property tax vs $1,400 in Arkansas (difference: $2,100). Net advantage: Texas saves $1,112/year total at $100K income with a $250K home. For homeowners with $382K+ homes: Arkansas total burden is actually LOWER than Texas once property tax is counted.
No, Arkansas fully exempts military retirement pay from state income tax. This makes Arkansas highly attractive for military retirees. A retiree with $60,000 military pension pays $0 in Arkansas vs over $2,400 in Oklahoma (3.9% effective on taxable income). Combined with extremely low cost of living (median home $170K), low property tax (0.56%), and natural beauty (Ozarks, Hot Springs), Arkansas is a top military retirement destination.
Move if: relocating from high-tax states like California/Illinois (save thousands/year), military retiree (no tax on retirement pay), seeking ultra-low cost of living (median home $170K), work remotely, or love outdoor recreation (Ozarks, Buffalo River, Hot Springs). Consider Northwest Arkansas (Bentonville/Fayetteville) for best job market. At 3.7% top rate and $3,212 at $100K, Arkansas is now near parity with Texas once property taxes are factored in. Stay away if: need major city amenities, prioritize top schools (AR ranks 42nd), or seek high-salary careers (AR median income $52K).
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How we calculate: Our Arkansas tax calculator uses official 2026 tax brackets from the Arkansas Department of Finance and Administration (5-bracket structure originally set by SB 8, 2023 special session, with the top rate further cut by a May 2026 special session, HB 1001/SB 1, retroactive to Jan 1, 2026). We apply marginal tax rates correctly (only income within each bracket is taxed at that rate). Taxable income uses Arkansas's own $2,470 standard deduction (single, 2026) as the basis — the calculator applies $97,530 taxable income at $100K for state calculations (federal calculations use the separate federal standard deduction). A $29 personal exemption credit is then applied directly against the calculated Arkansas tax, per DFA's official withholding formula. Federal tax is calculated using 2026 IRS brackets.
Data sources:
Verification: Tax brackets, standard deduction, and personal exemption credit verified directly against the Arkansas DFA's official Tax Year 2026 Withholding Tax Formula Method document on 2026-09-07. Spot-check at $100K: hand-calculated against that document's own worked formula → $3,212 state tax ✓ (this also corrected a separate engine bug where the $29 personal exemption had been applied as an income deduction instead of a direct tax credit). Our calculator accuracy: 99%+ for standard tax situations.
Limitations: Assumes single filer, standard deduction, W-2 income only. Does not include: itemized deductions, credits, military retirement exclusion (FULLY EXEMPT), business income, capital gains. Property and sales tax data are statewide averages; actual rates vary by locality.
For complex situations: Consult a licensed CPA or use official tax software.
Last Updated: September 2026
Verified By: Daniel · CountryTaxCalc
Contact: For corrections or questions, visit our contact page.
Last Updated: September 2026