(April 2013) The state legislature has reduced the top Arkansas income tax rate from 7.0 to 6.9 percent on net income greater than $44,000 for “tax years beginning on or after January 1, 2015.”  The measure1 also cuts income taxes for lower-income Arkansans beginning in January 2014.2


No Change in Arkansas Rank


The new 6.9 percent rate will remain the highest among states adjacent to Arkansas, and the third-highest in the Southeast region3 as the following chart shows:

North Carolina        7.75%
South Carolina        7.00%
Arkansas        6.90%
West Virginia        6.50%
Georgia, Kentucky        6.00%
Louisiana, Missouri        
Virginia        5.75%
Oklahoma        5.25%
Alabama, Mississippi        5.00%
Tennessee        6.00% on dividends and interest income only
Florida, Texas        No State Income Tax


No Dynamic Analysis


DFA estimates a $28.6 million loss (FY 2014) and $57.2 million loss (FY 2015) to the state of Arkansas.  DFA did not prepare separate static and dynamic revenue estimates in analyzing the measure. 


--Greg Kaza

1  PA 1459 of 2013 sponsored by state Rep. Charlie Collins, R-Fayetteville.

2 The measure “expands the current 6% income tax bracket by $10,000 to impose that 6% rate on taxable income from $20,400 to $43,999,” according to a one-page legislative impact statement (March 13) prepared by the state Department of Finance and Administration. “Currently, the 6% bracket applies to income of $20,400 to $33,999.”  The measure also “incorporates the current individual income tax brackets for the 1%, 2.5%, 3.5% and 4.5% tax rates, as indexed for inflation, into state law.”

3 Federation of State Tax Administrators,