Arkansas has cut its top income tax rate from 5.9% in 2022 to 4.7% in 2026 — one of the fastest state income tax reform stories in the South.
Arkansas's top income tax rate was 6.9% in 2019. Aggressive bipartisan tax reform drove it to 5.9% (2022), 4.9% (2023), 4.7% (2024–current). Further reductions are planned. The state's standard deduction is $2,200 (single) / $4,400 (married) — small compared to the federal $16,100, meaning Arkansas taxes a broader income base. No Arkansas city levies a local income tax on wages.
Arkansas is home to Walmart's global headquarters in Bentonville, which has transformed Northwest Arkansas into one of the most economically dynamic regions in the South. Suppliers, logistics companies, tech firms, and related businesses cluster around Bentonville — creating a concentration of corporate professionals with incomes in the $80,000–$200,000 range. For this workforce, Arkansas's declining income tax rate represents meaningful annual savings. A corporate manager earning $130,000 in Bentonville pays approximately $5,600 in Arkansas state income tax — down from roughly $7,500 when the top rate was 6.9%. The difference compounds significantly over a career.
Arkansas's standard deduction is small — $2,200 for single filers. The federal government lets single filers deduct $16,100 before income tax applies. Arkansas only allows $2,200. This means Arkansas taxes income starting at a much lower point than the federal return does. A worker earning $40,000 pays Arkansas income tax on $37,800 of it. This partially offsets the appeal of the 4.7% top rate — the effective burden is higher than a simple rate comparison would suggest.
Arkansas and Tennessee: two different approaches with similar headline appeal. Tennessee (0% income tax) beats Arkansas at every income level for income tax purposes. Yet many professional workers in Memphis, which straddles the border, live in Tennessee and work in Arkansas or vice versa — each state's income tax rules affect where wages are earned. Workers considering relocation from Memphis-area Tennessee jobs to Arkansas-based employers should factor in the income tax difference, which can be $3,000–$8,000 per year depending on salary.
Arkansas's reform trajectory is notable: the legislature committed to continued rate reductions contingent on revenue performance. The state could see rates fall below 4.7% in coming years. Workers evaluating Arkansas long-term should track the Department of Finance and Administration for rate announcements. At the current pace, Arkansas may approach the 3.9–4% range within a few years.
Estimates only. Arkansas std deduction $2,200 (single) / $4,400 (married). Top rate 4.7% applies above $10,000. Consult a tax professional for advice.
| Gross Pay (this check) | $0.00 |
| Federal Income Tax | −$0.00 |
| Arkansas State Tax (up to 4.7%) | −$0.00 |
| Social Security (6.2%) | −$0.00 |
| Medicare (1.45%) | −$0.00 |
| Net Take-Home Pay | $0.00 |
Arkansas's top income tax rate is 4.7% for 2026. The structure is: 0% on the first $4,999 of taxable income, 4% from $5,000–$9,999, and 4.7% on $10,000 and above. Arkansas's standard deduction is only $2,200 (single) / $4,400 (married), so the tax applies to nearly all earned income. The top rate has fallen from 6.9% in 2019 to 4.7% today, with further cuts possible.
No. Little Rock, Fayetteville, Fort Smith, Springdale, Jonesboro, Conway, and all other Arkansas municipalities have no local income tax on wages. Arkansas workers pay only state income tax, with no city surcharge applied.
Tennessee has no state income tax on wages. Arkansas's 4.7% top rate means workers pay roughly $2,600–$4,300 more in state income tax per year (at $60,000–$100,000 salary) compared to Tennessee. Border-area workers near Memphis have strong financial incentives to establish Tennessee residency. However, Northwest Arkansas (Fayetteville/Bentonville) is far from the Tennessee border and doesn't have this option practically available.
Arkansas has enacted legislation committing to continued rate reductions based on state revenue performance. The top rate could drop below 4.7% in 2027 or beyond. The state's goal is competitive parity with neighboring states — particularly Texas (0%) and Tennessee (0%). Watch for announcements from the Arkansas Department of Finance and Administration.
On $60,000 (single, biweekly), Arkansas withholds approximately $105–$115 per paycheck in state income tax — roughly $2,700–$2,900 annually. The effective rate on gross pay is about 4.5–4.8% because the small $2,200 standard deduction means almost all income is taxable, and most of it falls in the 4.7% bracket.
Arkansas provides a $6,000 per-person exemption on retirement income including Social Security, pension, and IRA distributions for individuals age 59½ and older ($12,000 for married couples). Income above the exemption threshold is taxed at regular Arkansas rates. This is less generous than states like Iowa and Mississippi, which exempt all Social Security income.
Arkansas taxes overtime and tips as ordinary income (up to 4.7%). The One Big Beautiful Bill exempts overtime premium pay and tip income from federal income tax only — Arkansas has not enacted a comparable state exemption. See our Tips Tax Calculator and Overtime Tax Calculator to see your federal savings.
Arkansas's largest employers are Walmart (Bentonville), Dillard's (Little Rock), Tyson Foods (Springdale), and Murphy USA. The retail, agricultural processing, logistics, and healthcare sectors dominate employment. Northwest Arkansas has emerged as a tech and corporate services hub thanks to the Walmart supplier ecosystem. For workers in these industries, Arkansas's declining income tax is a meaningful financial positive that has improved over recent years.