Arkansas Paycheck Calculator

Arkansas has pursued one of the more aggressive income tax reduction programmes of any state. A top rate that stood above 7% in the mid-2010s has been cut in stages, often through special legislative sessions convened specifically to accelerate reductions when state revenues came in ahead of forecast.

Alongside the rate cuts, Arkansas simplified its bracket structure. The state historically ran separate rate schedules depending on income level, which produced some notoriously confusing cliff effects at the boundaries. Those have largely been consolidated.

What remains for 2026 is close to a two-rate system: a low band on the first slice of taxable income, then the top rate of 3.9% on everything above roughly $4,600. Because that threshold is so low, almost every full-time worker in Arkansas pays the top rate on the bulk of their income — so in practice the effective state rate sits just under 4%, softened by the standard deduction and the personal tax credit.

Arkansas offers a standard deduction that is small by national standards, along with a personal tax credit structure rather than exemptions — a flat credit per taxpayer and dependent applied after the tax is computed, rather than a reduction in taxable income. For lower earners this credit can offset the entire liability.

Arkansas also provides an additional low-income tax table that can reduce or eliminate tax for taxpayers below certain thresholds, operating in parallel with the standard rate schedule.

Because Arkansas builds on federal concepts for most wage income, pre-tax 401(k) contributions and Section 125 health premiums reduce Arkansas taxable wages as well as federal. Arkansas does not tax Social Security benefits, and it offers an exemption for a portion of other retirement and pension income.

No Arkansas city or county levies an income tax, so withholding is identical in Little Rock, Fayetteville, Fort Smith and Bentonville.

Arkansas borders six states, and several of its largest employment centres sit close to a state line — most notably Texarkana, which straddles the Arkansas–Texas border, and the Fort Smith area near Oklahoma. Arkansas has a specific provision exempting the income of Texarkana residents to address the fact that the Texas side has no income tax at all.

More generally, if you live in Arkansas and work in a neighbouring state, Arkansas taxes you as a resident on all income and gives a credit for tax paid elsewhere. Arkansas has no broad reciprocal agreements of the kind Maryland or Pennsylvania maintain, so cross-border workers generally file in both states.

Property taxes in Arkansas are among the lowest in the country, and the combined sales tax is high — a pattern that leaves the overall burden moderate while making the paycheck itself look relatively healthy.