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Official Tax Guide

Arkansas Taxes 2025: Income, Sales, and Property Tax Guide

Complete guide to Arkansas state taxes. Income tax (Top 4.4%), sales tax, and what you need to know before moving.

Updated January 15, 2026
5 min read

State Tax Guide 2025: Arkansas

Welcome to Arkansas! As you settle into the Natural State, understanding the local tax landscape is crucial for effective financial planning. This guide provides a clear overview of Arkansas taxes for the 2025 tax year, focusing on the key areas most relevant to new residents.

1. Income Tax

Arkansas utilizes a progressive income tax system. This means that tax rates increase as your taxable income rises.

  • Top Marginal Rate: The highest state income tax rate is 4.4%. This rate applies to income above the highest tax bracket threshold.
  • Structure: While historically a more complex system with multiple brackets, recent legislation has simplified the structure towards a flatter system. For 2025, taxpayers can expect a simplified bracket structure with the top rate of 4.4% kicking in at a specified income level (which is adjusted periodically).
  • Key Consideration: It's important to note that Arkansas taxes "federal adjusted gross income" with several specific adjustments, meaning your state taxable income may differ from your federal taxable income.

2. Sales Tax

The sales tax in Arkansas is a combination of the state rate and local rates applied by cities and counties.

  • State Rate: The Arkansas state sales tax rate is 6.5%.
  • Local Rates: In addition to the state rate, local municipalities (cities and counties) can levy their own sales taxes. These local rates vary significantly across the state.
  • Combined Rate: When combining the state rate with local rates, the total sales tax rate can range from 6.5% to over 11% in some areas. Always be aware of the combined rate at your specific location for budgeting purposes.
  • Groceries: Arkansas has a unique approach to groceries. While subject to state and local sales taxes, a state law provides a credit that effectively lowers the state portion of the tax on most food items.

3. Property Tax

Arkansas is known for having some of the most favorable property tax rates in the nation, which is a significant benefit for homeowners.

  • Overview: The state does not have a uniform property tax rate. Instead, rates are set by local jurisdictions (counties, school districts, municipalities). Because of this, effective tax rates can vary.
  • National Comparison: Arkansas's property tax burden is consistently well below the national average. The median effective property tax rate in Arkansas is often cited in the range of 0.6% to 0.8% of a home's assessed value.
  • Assessment: Real property is assessed on its current market value. The state offers a homestead property tax credit for eligible homeowners, which can provide an annual reduction on the assessed value of their primary residence.

4. Other Taxes to Be Aware Of

Beyond income, sales, and property taxes, here are a few other notable taxes in Arkansas:

  • Fuel Taxes: Arkansas's gasoline tax is a combination of state and federal excise taxes. The state portion is a fixed rate per gallon, which is subject to change by legislative action.
  • "Sin" Taxes: Excise taxes are applied to specific goods, including alcohol and tobacco products. These rates are periodically adjusted and are included in the retail price.
  • Inheritance/Estate Tax: Arkansas does not have a state-level inheritance or estate tax. This is a significant advantage for those planning their estates, as assets passed to heirs are not taxed by the state of Arkansas.

5. Taxes for Retirees

Arkansas is generally considered a retirement-friendly state due to its tax treatment of retirement income.

  • Retirement Income: A significant portion of retirement income is exempt from Arkansas state income tax. This includes:
    • Social Security benefits (fully exempt).
    • Income from qualified employer-sponsored retirement plans (e.g., pensions, 401(k) distributions).
    • Railroad Retirement benefits.
  • Other Income: While retirement income is largely exempt, other forms of income, such as wages from part-time work or taxable investment income, are still subject to the state's income tax laws.

6. Comparison with Neighboring States

For context, here is a brief comparison of Arkansas's tax structure with its neighbors (based on 2025 rates):

  • Missouri: Has a progressive income tax with a top rate of 4.7% (scheduled to decrease). Sales tax is similar, with a state rate of 4.225% and significant local additions. Property taxes are also relatively low.
  • Tennessee: Has no state income tax on wages or investment income. However, its combined sales tax rates are among the highest in the U.S., often exceeding 9-10%.
  • Texas: Has no state income tax. Sales tax is a state rate of 6.25% with local additions, and property taxes are significantly higher than in Arkansas, as there is no state-level property tax to offset local levies.
  • Louisiana: Has a progressive income tax with a top rate of 4.25%. Sales tax is complex with a state rate of 4.45% and very high local rates, often making the total sales tax burden one of the highest in the country.

Disclaimer: This guide is for informational purposes only and reflects tax laws and rates for the 2025 tax year. Tax laws change frequently and can be impacted by new legislation. This information is not a substitute for professional advice. Please consult with a qualified CPA or tax professional for advice tailored to your specific financial situation.