Arkansas has two different individual income tax rate schedules depending on taxpayer income, with rates of 2.00 percent and 3.9 percent. Arkansas has a graduated corporate income tax, with rates ranging from 1.0 percent to 4.3 percent, a 6.50 percent state sales tax rate, and an average combined state and local sales tax rate of 9.48 percent. Arkansas has a 0.56 percent effective property tax rate on owner-occupied housing value. Arkansas does not have an estate tax or inheritance tax. Arkansas’s gas tax is 25 cents per gallon, and its cigarette excise tax is $1.15 per pack of 20 cigarettes.
Arkansas raises tax revenue primarily through general sales taxes (41.7 percent of total state and local tax revenue), individual income taxes (19.4 percent), and property taxes (17.0 percent). Arkansas collects $5,302 in state and local tax collections per capita, carries $6,005 in state and local debt per capita, and has an 87 percent funded ratio of public pension plans. Arkansas’s tax system ranks 32nd overall on the 2027 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Arkansas is no exception. Use the tabs below to compare Arkansas taxes with other states and to see how Arkansas raises tax revenue. You can also browse our tax maps, which are compiled from our annual publication, Facts & Figures 2026: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
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Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
9 min read
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
18 min read
Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Property taxes are the primary tool for financing local governments. While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services.
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It is important to understand how the SALT deduction’s benefits have changed since the SALT cap was put into place in 2018 before repealing the cap or making the deduction more generous. Doing so would disproportionately benefit higher earners, making the tax code more regressive.
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Neither Anchorage, Alaska, nor Portland, Oregon, impose any state or local sales taxes. Honolulu, Hawaii, has a low rate of 4.5 percent and several other major cities, including Milwaukee and Madison, Wisconsin, keep overall rates modest.
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Although state budgets may be in unusual places this year, sales tax holidays remain the same as they always have been—ineffective and inefficient.
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Krispy Kreme may have started the vaccine incentive ball rolling, but many states are putting big money into the effort with vaccine lotteries. Unlike a normal lottery, no one is paying for tickets—but the tax collector still gets paid when someone wins.
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Although most states are on solid financial footing following the coronavirus crisis, pension liabilities are a deep-seated problem that long predates the pandemic.
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State taxation of GILTI is unconventional and economically uncompetitive and will become even more so if the federal government adopts a more aggressive approach to taxing GILTI, as outlined in the American Jobs Plan Act.
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A landmark comparison of corporate tax costs in all 50 states, Location Matters provides a comprehensive calculation of real-world tax burdens, going beyond headline rates to demonstrate how tax codes impact businesses and offering policymakers a road map to improvement.
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State and local tax policy have always mattered, but the rise of remote work is bringing tax burdens and economic competitiveness to the forefront. It is a development that states cannot afford to ignore.
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Remote work is here to stay. Convenience rules can’t change that. What they can change is the decisions people make. Under this rule, those decisions may not be to Arkansas’s advantage.
With so many federal changes occurring in such a short amount of time—including some federal provisions changing more than once and a major change to the treatment of UC income occurring in the middle of tax filing season—state legislators have faced the challenge of responding to these changes quickly in order to provide certainty to taxpayers.
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