Arkansas payroll taxes come down to two separate state obligations: withholding state income tax from your employees’ wages and paying state unemployment insurance contributions on top of them. Each has its own registration, its own forms, and its own penalty clock. Get both set up before you run your first payroll.
Two Registrations, Two Account Numbers
You need a withholding account number from the Department of Finance and Administration (DFA) and a separate employer account number from the Division of Workforce Services (DWS) for unemployment insurance. The DFA registration goes through the Arkansas Taxpayer Access Point (ATAP) using the Arkansas Combined Registration Application.1Arkansas Department of Finance and Administration. Businesses The DWS registration is handled through the DWS EZ Tax Registration system.2The Official Website of the State of Arkansas. Unemployment Insurance (UI) Tax Employer Registration Both require your federal EIN.
When you have to register for UI depends on what kind of workforce you employ. Domestic-service employers register once they pay $1,000 or more in cash wages in any calendar quarter. Agricultural employers register at $20,000 in quarterly wages or once they have ten workers.3Arkansas Division of Workforce Services. Arkansas Employer Handbook
Withholding State Income Tax
Every employer paying wages in Arkansas withholds state income tax. How much you withhold turns on what the employee reports on Form AR4EC, the Arkansas Employee’s Withholding Exemption Certificate. If an employee never gives you a completed AR4EC, you withhold as if they claimed zero exemptions and zero dependents.4Arkansas Department of Finance and Administration. Employee’s Withholding Exemption Certificate (AR4EC)
The dollar amount comes from the DFA’s withholding tables, which factor in filing status, pay frequency, and dependents. New tables are published each year; the 2026 tables took effect January 1, 2026.5Arkansas Department of Finance and Administration. Withholding Tax – Low Income Tax Tables (Effective 01/01/2026) Arkansas runs a progressive rate structure, with a top marginal rate of 3.9% on taxable income above $25,000 after recent legislated reductions.
Unemployment Insurance Contributions
UI is entirely employer-paid. You owe contributions on each employee’s wages up to the annual taxable wage base, which stays at $7,000 per employee for 2026. Once a worker’s year-to-date wages cross $7,000, you stop owing UI tax on that worker for the rest of the calendar year.6Arkansas Division of Workforce Services. UI Employer Services
New employers pay a standard rate of 2.0% for 2026. Once you have enough claims history for an experience rating, your rate moves with your account: experienced employer rates for 2026 range from 0.200% to 5.100%, and deficit surcharges can push the effective rate as high as 6.100%.6Arkansas Division of Workforce Services. UI Employer Services Low turnover keeps you near the floor. Heavy turnover with a lot of benefit charges takes you the other direction.
Filing Schedules
Monthly Withholding Returns
Every new withholding account starts on a monthly schedule. You file Form AR941M by the 15th of the month after each reporting period.7Code of Arkansas Rules. 26 CAR 100-155 – Filing of Employer’s Withholding Return and Payment of Income Taxes Withheld Arkansas doesn’t offer a quarterly withholding option. It’s monthly or annual, nothing in between.8Arkansas Department of Finance and Administration. Arkansas Monthly Wage Withholding Report AR941M
If your Arkansas withholding falls below $1,000 in a reported period and you have a filing history, the DFA’s Withholding Tax Section may reclassify you to annual filing status. It isn’t automatic; the Commissioner of Revenue has to notify you first. Annual filers pay with Form AR941A by January 31 of the following year.9Arkansas Department of Finance and Administration. Withholding Tax Instructions
Annual Reconciliation
Every employer files Form AR3MAR, the annual reconciliation of wages paid and income tax withheld, by February 28 following the end of the tax year. The reconciliation has to match the W-2s you issue to employees.10Arkansas Department of Finance and Administration. Due Dates
Employers with 75 or more employees during the income year must file annual withholding statements electronically for tax years beginning on or after January 1, 2025.11Arkansas General Assembly. Act 616 of the 2025 Regular Session
Quarterly UI Reports
UI contributions are reported quarterly on the Employer’s Quarterly Contribution and Wage Report, Form DWS-ARK-209B. Due dates are April 30, July 31, October 31, and January 31.12Arkansas Department of Workforce Services. DWS-ARK-209B – Employer’s Quarterly Contribution and Wage Report General Information and Instructions
New Hire Reporting
Arkansas requires you to report each newly hired or rehired employee to the Arkansas New Hire Reporting Center within 20 days of the start date. The report needs the employee’s name, address, Social Security number, and start date, along with your business name, address, and federal taxpayer identification number. Sending a copy of the employee’s W-4 is the easiest way to meet the requirement.13Justia Law. Arkansas Code Title 11 Chapter 10 Subchapter 9 Section 11-10-902 – Reporting Requirements
What Late Filing Costs
Withholding
File a withholding return late with tax owed and the DFA assesses 5% of the unpaid tax per month (or partial month), capped at 35%. File on time but pay late and the penalty is 1% per month of the unpaid balance, also capped at 35%. If both apply, the combined penalty tops out at 35%. Interest runs at 10% per year on unpaid amounts from the original due date.14Arkansas Department of Finance and Administration. Penalty and Interest Charges
Unemployment Insurance
DWS penalties for late quarterly UI reports climb in tiers. Within 20 days of the due date, it’s $10 or 5% of contributions due, whichever is greater. More than 20 days late, it’s $20 or 10%. The top tier, $30 or 15%, applies when DWS has to estimate your wages, subpoena them, or when you amend a zero-wage report more than 20 days past deadline.15Justia Law. Arkansas Code Title 11 Chapter 10 Subchapter 7 Section 11-10-717 – Collection – Failure to Pay or Report – Penalty – Definition Interest on unpaid contributions runs at 1.5% per month, starting on the first day of the second month after the quarter ends.12Arkansas Department of Workforce Services. DWS-ARK-209B – Employer’s Quarterly Contribution and Wage Report General Information and Instructions
Keeping Records
Arkansas law requires employers to keep payroll records for at least three years. Each employee’s name, address, occupation, pay rate, and amount paid per pay period all have to be recorded, kept at or near the place of employment, and made available for inspection by the Division of Labor at any reasonable time.16Justia Law. Arkansas Code Title 11 Chapter 4 Subchapter 2 Section 11-4-217 – Records Kept by Employer Four years is a safer working minimum, since assessments and audits can reach back beyond the three-year floor.