State-by-State Guide to Taxes on Retirees - Arkansas
Tool | November 2019

State-by-State Guide to Taxes on Retirees

Arkansas

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The Bottom Line
Flag of Arkansas

Tax-Friendly

The Natural State exempts Social Security benefits and up to $6,000 of retirement income from its state income tax. While Arkansas’ property taxes are among the lowest in the nation, its sales taxes—which are levied on food as well—are at the top. A plus for veterans: All military pension income is tax-exempt.

State Sales Tax

6.5% state levy. Localities can add as much as 5.13%, and the average combined rate is 9.47%, according to the Tax Foundation. The state taxes food at .125%, and localities can add to that.

Income Tax Range

Low: 0.9% (on up to $4,499 of taxable income)

High: 6.9% (on more than $79,301 of taxable income)

Effective tax rate: 3.56% for single filers, 6.15% for joint filers.

Service pay for active-duty members of the armed forces is completely exempt from income tax.

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

Up to $6,000 of income from private or government employer sponsored retirement plans is exempt. Distributions from traditional IRAs also qualify for the $6,000 exemption if the taxpayer is at least 59 1/2 years old.

Military pensions and Railroad Retirement benefits are fully exempt.

Taxpayers age 65 and older who don't claim a retirement income exemption are eligible for an additional $26 tax credit (2018 amount).

Property Taxes

In Arkansas, residents pay an average of $658 in taxes per $100,000 of assessed home value.

Tax breaks for seniors: The taxable assessed value of homes of residents 65 or older, or those who are disabled, can be frozen 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

None

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