ARKANSAS HAS HIGHEST INCOME TAX RATE AMONG BORDER STATES  

“Reduce the state’s income tax. Among the reforms, consider an across the board 10% cut…reduce the marginal rates, exempt taxpayers below a certain income level from filing, and expedite the process of indexing for inflation.” (Policy Foundation, Murphy Commission project, 1998)

(November 2011) Arkansas still has the highest income tax rate among states that border it, according to 2011 data compiled by the Federation of State Tax Administrators.1  The group has published a chart that shows Arkansas has a top rate of 7 percent. The chart can be viewed at: http://www.taxadmin.org/fta/rate/ind_inc.pdf

The following chart lists states that border Arkansas and their top income tax rates:

State                                              Top Rate

Arkansas                                      7.0%

Louisiana                                      6.0%

Missouri                                        6.0%

Oklahoma                                     5.5%

Mississippi                                   5.0%

Tennessee                                   Limited to dividends and interest

Texas                                            No income tax

North Carolina is the only state in the southeast with a higher rate (7.75%).  Other states in the region and their top rates are South Carolina (7.0%), Georgia (6.0%), Kentucky (6.0%), West Virginia (6.5%), Virginia (5.75%) and Alabama (5.0%).

–Greg Kaza

1  The Federation reports that seven states do not have an income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. The income tax in New Hampshire and Tennessee is limited to dividends and interest.