(2Q-2021) Cutting Arkansas’ top income tax rate to 4.79% would place it among the third of states with the lowest rates, a reversal of its relative position in 2015 when it ranked among states with the highest rates.

Gov. Asa Hutchinson will call a special legislative session to consider income tax cuts. Since Hutchinson took officein 2015, Arkansas’ top rate has declined from 6.9% to 5.9%. He has proposed a further reduction to 5.5%, though a 4.79% rate would place Arkansas in a stronger competitive position versus other states, a point illustrated in the following seven charts compiled with Council of State Governments and Federation of Tax Administrators data.

Third of States with Highest Rates (2015)

Third of States with Lowest Rates (2015)

Today, Arkansas is in the middle third of states, due to the reduction of its top rate from 6.9% to 5.9% since 2015.

sales tax base, forcing reversal of their earlier decision to cut income tax rates.

Arizona joined states with the highest rates after voters approved Proposition 208 last year. The measure targets married filing jointly or single taxpayers with annual taxable incomes greater than $500,000, and single or married filing separately households with taxable income greater than $250,000.

Third of States with Highest Rates (2021)

By contrast, Utah and Ohio joined states with the lowest rates after policymakers approved income tax cuts.

States with Lowest Rates (2021)

In May, policymakers in Oklahoma, which borders Arkansas, cut the state’s top income tax rate from 5.0 to 4.75%. (The Oklahoman, May 23, 2021). Oklahoma will join states with the lowest rates as a result of the action. Arkansas would also join this group if policymakers used part of the state’s $1 billion surplus to cut the top rate to 4.79% in the upcoming special session.

States with Lowest Rates (Hypothetical 2022)