(May 2026) Arkansas policymakers reduced the top state individual income tax rate from 3.9% to 3.7% in early May, using an estimated $334.4 million projected fiscal surplus in the current 2025-26 fiscal year.
Gov. Sarah Huckabee Sanders called a special session of the state legislature April 30 to consider the tax cut. The session convened on May 4 and adjourned sine die (1) on May 6 after legislators passed the tax cut. The Senate version passed 29-6 in the state Senate and 79-18 in the House and was signed into law by Gov. Sanders as Public Act 2. The House version passed 79-17 in the House and 27-6 in the Senate and was signed by Gov. Sanders as PA 1.
The individual income tax cut is effective January 1, 2026.
The top corporate income tax rate was cut to 4.1%, effective January 1, 2027.
Stability, Growth and Reserves
In calling the special session, Gov. Sanders observed, “With the state’s financial stability, increased economic growth, healthy reserve accounts, and conservative spending policies, additional tax reductions can be enacted to provide further tax relief during this period.” Gov. Sanders and the legislature have cut the top income tax rate three separate times since 2023, saving Arkansas taxpayers $1.5 billion, according to state fiscal estimates.
–Greg Kaza
(1) Sine die is Latin for “without a day,” which means the legislature has adjourned indefinitely with no appointed date for resumption. A regular session is scheduled for early 2027, though Gov. Sanders retains authority to call another special session.
