Arkansas State Tax Rate

Arkansas uses a mix of sales taxes, income taxes, and property taxes to fund state and local services.

While the state’s individual income tax rates are relatively low compared to many states, sales taxes are higher once local rates are added.

Sales Tax in Arkansas

• State sales tax rate: 6.5%
• Local sales taxes: Cities and counties may add their own taxes
• Average combined rate: Approximately 9.48% statewide

Food Sales Tax

• Most grocery food items for home consumption: 0% state sales tax
• Prepared foods and restaurant meals: Taxed at the full state and local rate

Because local sales tax rates vary by location, the total tax you pay can differ significantly depending on where you shop.

Individual Income Tax

Arkansas uses a graduated income tax system for individuals:

• Tax rates: Range from 2.0% to 3.9%
• Higher earners pay higher rates, but the top marginal rate is relatively modest

Retirement Income Benefit

• Social Security benefits: Fully exempt from Arkansas state income tax
  This exemption makes Arkansas more tax-friendly for retirees who rely on Social Security income.

Corporate Income Tax

• Top corporate tax rate: 4.3%
• The rate applies to C-corporations operating in Arkansas
• Pass-through businesses (such as S-corps and LLCs) generally pay tax at the individual level instead

Other Arkansas Taxes

Property Tax

• Effective property tax rate: About 0.53% for owner-occupied homes
  This relatively low rate makes Arkansas more attractive to homeowners than many other states.

Excise Taxes

• Gasoline tax: 25 cents per gallon
• Cigarette tax: $1.15 per pack

These taxes are built into the price of fuel and tobacco products.

Bottom Line

• Arkansas relies heavily on sales taxes, especially when local rates are included
• Individual income tax rates are modest, topping out at 3.9%
• Social Security income is fully exempt
• Property taxes are relatively low
• Businesses face a corporate tax rate up to 4.3%

File Electronically for Convenience and Accuracy

If you are required to file an Arkansas income tax return, electronic filing is strongly recommended.

E-filing helps:

• Reduce errors in income and deduction calculations
• Speed up processing and refunds
• Provide faster confirmation that your return was accepted

Using tax software or a professional e-file provider ensures your Arkansas tax return is accurate, compliant, and processed as efficiently as possible.