Arkansas state and local tax rates stack in layers, and what you pay depends on where you live and what you’re buying. The state sales and use tax is 6.5%, but county and city add-ons can push the total past 12% in some places. The top individual income tax rate falls to 3.7% for 2026, corporate income tops out at 4.3%, and property is assessed at 20% of market value before local millage rates are applied.
Sales Tax at the Register
The state sales and use tax is 6.5% on most tangible goods, digital products, and a broad list of services, from vehicle and appliance repair to dry cleaning, cable television, pest control, and lodging.1Arkansas Department of Finance and Administration. Sales and Use Tax FAQs2Justia Law. Arkansas Code 26-52-301 – Tax Levied Buy something online from a seller that doesn’t collect Arkansas tax and you owe the same 6.5% as a use tax on your state return.
Counties and cities can layer their own sales taxes on top, but voters in the jurisdiction have to approve each one, and the ballot must state what the revenue funds and whether the tax is permanent or tied to a specific project.3Justia Law. Arkansas Code 26-74-201 – Purpose Once approved, the Department of Finance and Administration collects the local tax alongside the state tax and sends the proceeds back.
Local rates generally run between 0.5% and about 6%. There’s no statutory cap on the combined local rate for most purchases; the previous per-transaction cap was eliminated in 2008, with narrow exceptions for motor vehicles, aircraft, watercraft, and manufactured housing.1Arkansas Department of Finance and Administration. Sales and Use Tax FAQs Stack everything together and you might pay around 7% or 8% in lower-tax areas, or 11% to nearly 13% in cities with multiple local levies. Because the rate can change across a county line, the DFA publishes current city and county tax rate tables so you can check before a large purchase.4Arkansas Department of Finance and Administration. City and County Sales and Use Tax Rates
Where the Standard Rate Doesn’t Apply
Groceries
Food and food ingredients bought for home preparation are taxed at just 0.125% at the state level, a fraction of the 6.5% general rate. Prepared foods, candy, soft drinks, and tobacco don’t qualify. Local sales taxes still apply at the full local rate, so your grocery receipt won’t show 0.125% at the bottom. Legislation proposed in early 2025 would have eliminated even that small state-level grocery tax as of January 1, 2026; check the DFA site to confirm whether it took effect.
Used Vehicles
Vehicle sales tax is paid when you register, not at the dealership. New vehicles under $4,000 owe no state tax; at $4,000 or above, the full 6.5% applies.5FindLaw. Arkansas Code 26-52-510 – Payment of Tax on Motor Vehicles by Consumers Used vehicles get an extra tier: nothing under $4,000, a reduced 3.5% state rate from $4,000 to $9,999, and the full 6.5% at $10,000 and up.6Arkansas Department of Finance and Administration. Recent Changes in the Law Local taxes still apply at the full local percentage regardless of price.
Alcohol
Alcoholic beverages carry supplemental taxes on gross receipts on top of the ordinary sales tax: 10% across the board, plus an additional 4% that doesn’t apply to beer or wine.7Justia Law. Arkansas Code 3-9-213 – Gross Receipts and Supplemental Taxes on Sale of Alcoholic Beverages A bottle of spirits effectively carries a 14% supplemental tax before the base sales tax and local rates are added.
The Back-to-School Sales Tax Holiday
Arkansas suspends state and local sales tax for one weekend each summer on qualifying back-to-school items. For 2026, the holiday runs from 12:01 a.m. Saturday, August 1 through 11:59 p.m. Sunday, August 2.8Arkansas Department of Finance and Administration. Arkansas Sales Tax Holiday Instructions During that window, no state or local sales tax is collected on:
- Clothing and footwear priced under $100 per item
- Clothing accessories and equipment priced under $50 per item
- School supplies, art supplies, and instructional materials on the DFA’s published list, with no price cap
Items priced at or above the threshold remain fully taxable.
Individual Income Tax
Arkansas uses a graduated income tax that has been cut several times in recent years. The top marginal rate drops to 3.7% starting January 1, 2026.9Arkansas House of Representatives. Tax Cuts Passed in Special Session The bracket structure splits filers into two tracks based on whether net taxable income falls above or below roughly $89,600.10Justia Law. Arkansas Code 26-51-201 – Individuals, Trusts, and Estates
If your net taxable income is $89,600 or less, rates step up through five tiers: 0% on the first $5,299, then 2%, 3%, and 3.4% on the middle ranges, hitting the top rate once income exceeds $25,000. Above $89,600, a simplified two-tier table applies: 2% on the first $4,500 and the top rate on everything after. A bracket adjustment credit phases out between $89,601 and $92,700 so income creeping just over the line doesn’t trigger a sudden jump.
The standard deduction for 2025 was $2,470 per taxpayer and $4,940 for married couples filing jointly. A proposal to raise it to $4,400 for 2026 did not pass in the 2025 legislative session, so confirm the current figure on the DFA’s published forms before filing.
Retirement Income
Social Security benefits are fully exempt from Arkansas income tax regardless of your income level or filing status.
For other retirement income, the state exempts the first $6,000 per year of benefits from an employment-related plan, including pensions, 401(k) plans, profit-sharing plans, and annuities. The exemption covers both public and private plans. Traditional IRAs don’t qualify unless the IRA was set up by an employer as a simplified employee pension. Military retirement pay based on length of service also gets the $6,000 exemption, and military disability pensions are fully exempt with no dollar cap.11Arkansas Administrative Code. 26 CAR 100-118 – Retirement Plans and Disability Benefits
Property Tax
Property tax is set and collected locally, but the state fixes the assessment ratio: every property is assessed at 20% of its market value.12Arkansas Department of Finance and Administration. Frequently Asked Questions A home with a $200,000 market value has an assessed value of $40,000. Local taxing authorities apply their millage rate to that assessed value.
Statewide, the average total millage is about 48.90 mills, with school districts averaging 38.66 mills, counties 7.92 mills, and cities 4.12 mills.13Arkansas Department of Finance and Administration. 2024 Millage Report At that average rate, the $200,000 home would owe roughly $1,956 a year before credits ($40,000 × 0.04890).
Homeowners in their primary residence can claim the homestead property tax credit. Beginning with 2026 tax bills, the maximum credit rises to $600 per year, up from $500.14Arkansas Department of Finance and Administration. Property Tax Relief The credit applies only to the home you actually live in.
Corporate Income Tax
C corporations pay Arkansas income tax on net income earned in the state, through four narrow brackets:15Arkansas Economic Development Commission. Corporate Income Tax Rates in Arkansas
- 1% on the first $3,000
- 2% from $3,001 to $5,000
- 3% from $5,001 to $11,000
- 4.3% on income above $11,000
Any profitable corporation with more than a few thousand dollars in Arkansas income hits the top 4.3% rate quickly. Depending on how the business is organized, the state franchise tax on domestic and foreign corporations may also apply.
Fuel Excise Tax
Arkansas charges a per-gallon excise tax on motor fuel that’s built into the pump price. At the most recent published rates, gasoline is taxed at $0.247 per gallon and diesel at $0.285 per gallon. The revenue funds road construction and maintenance and is separate from the general sales tax. Federal fuel taxes apply on top.