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 34th overall on the 2026 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.
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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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While many factors influence business location and investment decisions, sales taxes are something within lawmakers’ control that can have immediate impacts.
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Twenty-six states and the District of Columbia had notable tax changes take effect on January 1, 2021. Because most states’ legislative sessions were cut short in 2020 due to the COVID-19 pandemic, fewer tax changes were adopted in 2020 than in a typical year.
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The coronavirus relief package represents the second-largest recovery legislation, behind only the CARES Act, for a combined total of more than $3 trillion in support.
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Lt. Governor Griffin’s goal to eliminate the income tax is a commendable one that should be considered with cautious optimism, though with the understanding that even a well-designed process may end up putting more weight on an already uncompetitive sales tax. In the meantime, there is plenty of space for incremental improvements in Arkansas’s income tax that will make the state more competitive.
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On Monday, members of the bipartisan Gang of Eight negotiating an end-of-year pandemic relief package announced that they had settled on language and had divided the package into two bills: a pandemic aid package and a $160 billion state and local support package.
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A typical American household with four phones on a “family share” wireless plan can expect to pay about $270 per year (or 22 percent of their cell phone bill) in taxes, fees, and surcharges.
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President Joe Biden’s tax plan would yield combined top marginal state and local rates in excess of 60 percent in three states: California, Hawaii, and New Jersey (also New York City).
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Here are the state tax ballot measures to watch on Election Day 2020. Explore the most notable 2020 state tax ballot measures in 15 states.
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State tax revenue collections were down 5.5 percent in FY 2020, driven by a dismal final quarter (April through June) as states began to feel the impact of the COVID-19 pandemic. While these early losses are certainly not desirable, they are manageable and far better than many feared.
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