TOP ARKANSAS INCOME TAX RATE

REDUCED FROM 7.0 TO 6.9 PERCENT

(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

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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, http://www.taxadmin.org/fta/rate/ind_inc.pdf