Arkansas state income tax
Arkansas has a state income tax. It is graduated, with a top marginal rate of 3.7%. Graduated tax structure for the 2026 and following tax years (SB1/Act, signed 5/6/2026, retroactive to 1/1/2026, amending A.C.A. § 26-51-201, cutting the top rate from 3.9% to 3.7%): standard table 0% ($0–$5,599), 2% ($5,600–$11,199), 3% ($11,200–$15,999), 3.4% ($16,000–$26,399), 3.7% ($26,400–$94,700). A simplified 'upper income' table applies to net taxable income above $94,700: 2% on the first $4,700, 3.7% on the remainder, with a bracket-adjustment credit for income between $94,700 and $97,601 to smooth the transition. Capital gains are taxed under special rules (see below).
Does Arkansas have a state income tax?
Yes. Arkansas taxes individual income on a graduated schedule topping out at 3.7%. Graduated tax structure for the 2026 and following tax years (SB1/Act, signed 5/6/2026, retroactive to 1/1/2026, amending A.C.A. § 26-51-201, cutting the top rate from 3.9% to 3.7%): standard table 0% ($0–$5,599), 2% ($5,600–$11,199), 3% ($11,200–$15,999), 3.4% ($16,000–$26,399), 3.7% ($26,400–$94,700). A simplified 'upper income' table applies to net taxable income above $94,700: 2% on the first $4,700, 3.7% on the remainder, with a bracket-adjustment credit for income between $94,700 and $97,601 to smooth the transition.
| Item | Arkansas |
|---|---|
| State income tax | Yes, graduated |
| Top marginal rate | 3.7% |
| Capital gains | Special rules, up to 3.7% |
| State sales tax | 6.5% (plus local) |
| Avg. property tax rate | 0.59% of home value |
| Estate / inheritance tax | None |
How does Arkansas tax capital gains?
Arkansas taxes capital gains under special rules rather than at the ordinary income rate. Net capital gain (net long-term gain in excess of any net short-term loss) receives a 50% exclusion from taxable income; the remainder is taxed at regular graduated rates (top rate 3.7% for 2026). Net capital gain in excess of $10 million in a tax year is fully exempt, on top of the 50% exclusion on the first $10 million. Short-term gains are taxed in full as ordinary income. You still owe federal capital gains tax on top of any state tax. See how capital gains tax works in 2026.
What about retirement income in Arkansas?
Retirement income is taxed differently from wages in many states. For how Arkansas treats Social Security, pensions, and 401(k)/IRA withdrawals, see Arkansas retirement taxes.
Sources
- Arkansas income tax rates and brackets: Arkansas Department of Revenue / Taxation.
- Arkansas capital gains treatment: Arkansas tax authority.
- Arkansas sales tax: Arkansas Department of Revenue.