Arkansas does not have a separate capital gains tax. A gain from stocks, a business or real estate goes onto Arkansas Form AR1000D, which cuts a net long-term gain in half before it is added to your other income and taxed at the normal income tax rates. The top rate fell to 3.7% for 2026, and the Department of Finance and Administration (DFA) says a net gain above $10,000,000 is exempt.
This guide uses the DFA's 2025 AR1000D schedule, its 2025 individual income tax instruction booklet and two of its tax FAQs, the DFA fiscal impact statement for House Bill 1001 of 2026, the enacted text of Act 1 (House Bill 1001) of the 2026 first extraordinary session, the Arkansas House's report on that law, the DFA's 2026 withholding formula and two IRS pages, all read on 3 November 2026. We did not read the Arkansas Code itself (Ark. Code 26-51-815), so every rule below is stated as the DFA states it, and special rules for particular investments are not covered.
The DFA's tax FAQ on capital gains tax says a portion of net long-term capital gains is excluded from income, with the remaining amount treated as regular income, and tells filers to complete Schedule AR1000D for the year they are filing. On the 2025 AR1000D, line 8 says that if you have a gain you multiply line 7b by 50 percent (.50), and otherwise you enter the loss. So the taxable half of a long-term gain is added to your other Arkansas income and taxed at the regular rates.
Short-term gains do not get this treatment. The same form has a separate line 11 for the Arkansas short-term capital gain, and line 12, the total taxable Arkansas capital gain or loss, adds line 8 and line 11. The DFA's FAQ on capital gains and losses sets the dividing line: a gain or loss is long-term if the property was held more than one year, and short-term if it was held for one year or less. IRS Topic 409 uses the same one-year line for federal purposes.
Line 7b of the 2025 AR1000D says that if the amount on line 7a is over $10,000,000 you enter only $10,000,000. The DFA's FAQ gives the legal basis: per Act 1488 of 2013, the amount of net capital gain in excess of ten million dollars from a gain realized on or after January 1, 2014 is exempt from state tax. Because line 8 then takes 50 percent of the capped figure, the most long-term gain that can reach your Arkansas return in one year is $5,000,000 of taxable gain. We read the form and the FAQ, not the Act, so ask the DFA how the cap works if you have several large sales in one year.
You first work out your federal capital gain or loss on Schedule D. The DFA's FAQ then says that if you have a gain or loss on federal Schedule D after the netting process, you use Arkansas Form AR1000D to find the taxable amount, and the instruction booklet says to attach federal Schedule D and Form AR1000D to your return. Line 1 of AR1000D starts from the federal long-term gain or loss on Schedule D line 15 (or Form 1040 line 7), line 7a subtracts a net short-term loss from the long-term gain, and the result of line 12 goes on line 14 of Form AR1000F or AR1000NR (filing status 4 enters columns A and B separately). The form also has lines for adjusting gains and losses for depreciation differences between the federal and Arkansas amounts, because the DFA says Arkansas did not adopt the federal bonus depreciation provision from previous years.
The Arkansas House reported on 8 May 2026 that, in a special session, it passed House Bill 1001 and Senate Bill 1, that the legislation lowers the top individual income tax rate to 3.7% beginning January 1, 2026, and that House Bill 1001 is now Act 1. The DFA's fiscal impact statement for HB1001 gives the tables for 2026 and following tax years: 0% up to $5,599, 2% from $5,600 to $11,199, 3% from $11,200 to $15,999, 3.4% from $16,000 to $26,399 and 3.7% from $26,400 to $94,700, with an upper income table of 2% on the first $4,700 and 3.7% above that. It adds that net taxable income of more than $94,700 but less than $97,601 is reduced by a bracket adjustment amount. The enacted text of Act 1, which we also read on 3 November 2026, sets the same tables for tax years beginning on or after January 1, 2026, with bracket adjustment amounts that fall from $290 to $10 in $10 steps for net income from $94,701 to $97,600 and nothing at $97,601 and over. It also says the tables are adjusted annually under subsection (d) of Ark. Code 26-51-201, so the thresholds for later years may differ. The DFA's withholding formula is dated effective 1 January 2026.
For the 2025 return, the DFA's instruction booklet says the marginal top rate for 2025 is 3.9%. We have not seen the DFA's 2026 return instructions, which will be the final word on the 2026 tables.
This table is our arithmetic, not an official calculation. It takes a net long-term capital gain, applies the 50% exclusion and the $10,000,000 cap from AR1000D, and multiplies the taxable part by the top marginal rate. It assumes your other taxable income already puts you in the top bracket (above $26,400 for 2026), which is the case for most people with a large gain, and ignores credits, deductions and the bracket adjustment for incomes near $94,700 to $97,600. Amounts are rounded to the nearest dollar.
| Net long-term gain | Amount taxed (50%, cap $10M) | Added tax at 3.7% (2026) | Added tax at 3.9% (2025) |
|---|---|---|---|
| $10,000 | $5,000 | $185 | $195 |
| $50,000 | $25,000 | $925 | $975 |
| $100,000 | $50,000 | $1,850 | $1,950 |
| $500,000 | $250,000 | $9,250 | $9,750 |
| $10,000,000 | $5,000,000 | $185,000 | $195,000 |
| $12,000,000 | $5,000,000 | $185,000 | $195,000 |
Worked example (ours): a $100,000 net long-term gain adds $50,000 of taxable income, so the added Arkansas tax at 3.7% is $1,850, an effective 1.85% on the gain. A $50,000 short-term gain, taxed in full, adds $1,850 at the same rate, which is double the tax on the same long-term gain.
The DFA's instruction booklet says the capital loss that can be deducted after offsetting capital gains is limited to $3,000 ($1,500 per taxpayer for filing Status 4 or 5), and that if your loss was more than the yearly limit you can carry over the unused part to later years until it is used up. Under line 7a, a net short-term loss is subtracted from a long-term gain before the 50% is taken.
The DFA's instruction booklet says the gain on the sale of your personal residence is exempt up to $250,000 per taxpayer ($500,000 for married couples filing on the same return), and its FAQ adds that the property must have been owned and used as your principal residence for two or more years during the five years ending on the day of sale. IRS Topic 701 gives the federal exclusion as up to $250,000, or up to $500,000 on a joint return. The DFA pages we read do not say how gain above the exempt amount is reported; in our reading it goes onto federal Schedule D and through AR1000D according to its holding period, but confirm that with the DFA.
The DFA says nonresidents who received any gross income from Arkansas sources must file a return, and part-year residents who received any gross income while an Arkansas resident must file one, on Form AR1000NR. Both fill in column A as if they were full-year residents, listing all income from all sources for the entire year, and column C with income derived from Arkansas sources and/or received as an Arkansas resident (no matter where the income was earned). The instructions say the total tax is computed on the column A totals and then prorated after credits: you divide the Arkansas income by total income (line 38C, a decimal rounded to six places, never above 100%) and multiply the net tax by it (line 38D).
In our reading, a gain counted in column A raises the rate applied to your Arkansas share. We did not find a DFA rule in the pages we read on which gains count as Arkansas-source, for example a gain on stock sold by a nonresident, so ask the DFA before assuming a gain is outside Arkansas tax. Act 1019 of 2021 covers pay for work done inside and outside Arkansas, under which a nonresident is taxed only on the amount earned while physically in Arkansas; it concerns pay for work, not investment gains.