“There is significant evidence that reductions in marginal state tax rates encourage state economic growth …Rates on productive behavior should be reduced.” “Reduce the state’s income tax…repeal the state’s capital gains tax.” Arkansas Policy Foundation, Murphy Commission project, 1998


(August 2018) A state legislative task force has recommended reducing the highest Arkansas income tax rate, a policy advanced by the Policy Foundation since its founding as a nonprofit, nonpartisan market-based think tank in 1995.


The Tax Reform and Relief Legislative Task Force recommended reducing “the number of individual income tax tables from three to one” and cutting “the top marginal rate for individuals from six and nine-tenths percent (6.9%) to six and five-tenths percent (6.5%).” The recommendation, known as ‘Option A’ would create the following individual income tax table:


$0 to $4,299                (0.0%)

$4,300 to $8,399         (2.0%)

$8,400 to $12,599       (3.0%)

$12,600 to $20,999     (3.4%)

$21,000 to $35,099     (5.0%)

$35,100 to $80,000     (6.0%)

$80,000+                     (6.5%)


The panel did not recommend another proposal (‘Option B’) to “reduce the number of individual income tax tables from three to one,” cut “the top marginal rate for individuals … to six and five-tenths percent (6.5%),” and create an “Earned Income Tax Credit (EITC) of ten percent (10%) of the federal EITC.”  The panel also did not recommend reducing “the top personal income tax rate from 6.9% to 6.0%.”


The Task Force was established1 “to examine and identify areas of potential tax reform within the tax laws of the State of Arkansas and to recommend legislation to the General Assembly for consideration during the 2019 regular session in order to: (A)  Modernize and simplify the Arkansas tax code; (B)  Make the Arkansas tax laws competitive with other states in order to attract businesses to the state;  (C)  Create jobs for Arkansas; and (D) Ensure fairness to all individuals and entities impacted by the tax laws of the State of Arkansas.”


— Greg Kaza

1 Act 79 of the 2017 Regular Session