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Arkansas Taxes: What You Need to Know

Federal taxes are the taxes you pay to the U.S. government, which is expected to be the same everywhere in the U.S. Likewise, federal taxes applicable to Arkansas citizens are no different. The amount withheld depends on your income level and filing status. Arkansas’s state income taxes vary based on individual income. However, some localities may also have additional taxes, which is rare.

Source: https://www.arkansas.gov/dfa/income_tax/documents/moving_2_arkansas.pdf

FICA & State Insurance Taxes

• Social Security Tax: 6.2% withheld from the employee, matched by 6.2% from the employer — applied to the first $184,500 of wages in 2026.
• Medicare Tax: 1.45% withheld from the employee, matched by 1.45% from the employer — no wage cap. Employees earning over $200,000 pay an additional 0.9% (employer does not match this portion).
• Arkansas State Unemployment Insurance (SUI): Employer-paid only. Rates range from 0.2% to 10.1% on the first $7,000 of each employee’s wages per year. New employers pay 2.0% plus a 0.2% stabilization rate. Employees in Arkansas do not pay SUI.
• FUTA (Federal Unemployment Tax): 6% employer-only tax on the first $7,000 per employee per year. Arkansas employers typically qualify for a 5.4% federal credit, reducing the effective FUTA rate to 0.6%.

Sources: https://www.irs.gov/taxtopics/tc751 | https://dws.arkansas.gov/workforce-services/unemployment/employer-ui-information/employer-ui-contributions/

Pre-Tax Deductions

These are deductions taken from an individual’s gross pay before taxes are applied, which reduces your taxable income. Common pre-tax deductions include:

• Medical Insurance Premiums: Employee contributions toward employer-sponsored health, dental, and vision plans are typically deducted pre-tax under a Section 125 cafeteria plan.
• 401(k) Contributions: In 2026, employees can contribute up to $24,500 to a traditional 401(k), 403(b), or most 457 plans. Catch-up contributions are $8,000 for ages 50–59 and 64+, or $11,250 for ages 60–63. Contributions reduce your federal and Arkansas state taxable income dollar-for-dollar.
• IRA Contributions: The 2026 IRA contribution limit is $7,500 (up from $7,000 in 2025). Traditional IRA contributions may be deductible depending on income and workplace plan coverage.
• Flexible Spending Accounts (FSA): The 2026 health FSA contribution limit is $3,300, with a maximum carryover of $660.
• Health Savings Accounts (HSA): For 2026, the HSA contribution limit is $4,400 for self-only coverage and $8,750 for family coverage. Those 55 and older can make an additional $1,000 catch-up contribution.

Source: https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500

Arkansas Income Taxes Breakdown Table for 2026

Amounts are estimates for illustrative purposes. Actual withholding depends on W-4 elections, pay frequency, and pre-tax deductions.

Source: https://www.dfa.arkansas.gov/income-tax/withholding-tax/withholding-tax-formula/ | https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill

Median Household Income in Arkansas

The median household income in Arkansas was 62,146 U.S. dollars (in 2024); in 2023 it came to 60,400 U.S. dollars.

Source: https://data.census.gov/table?q=median+household+income+Arkansas

Arkansas Tax Brackets 2026

Arkansas restructured its income tax brackets for 2026, reducing the top individual income tax rate to 3.7%. The tax rates change based on individual income level and filing status, such as single or married filing jointly. Higher earners will pay a higher percentage of their income in taxes, while lower incomes will pay less. The state aims to make the tax system more equitable and manageable for everyone.

Here’s a table summarizing the 2026 Arkansas Tax Brackets:

For taxpayers with annual income up to $94,700:

For taxpayers with annual income above $94,700 (Upper-Income Table):

Note: A bracket adjustment applies for income between $94,701 and $97,600. Refer to the Arkansas DFA withholding tables for the precise calculation at this income level.

https://www.dfa.arkansas.gov/income-tax/withholding-tax/withholding-tax-formula/

Standard Deductions

Source: https://www.dfa.arkansas.gov/income-tax/withholding-tax/withholding-tax-formula/

Additional Rate Schedules

For individuals with an annual income of $94,700 or less:

• 0% on income up to $5,599
• 2% on income from $5,600 to $11,199
• 3% on income from $11,200 to $15,999
• 3.4% on income from $16,000 to $26,399
• 3.7% on income from $26,400 to $94,700

For individuals with an annual income greater than $94,700:

• 2% on income up to $4,700
• 3.7% on income above $4,700
• (Bracket adjustment applies for income between $94,701 and $97,600)

Source: https://www.dfa.arkansas.gov/income-tax/withholding-tax/withholding-tax-formula/

Wrapping up

Arkansas has been actively cutting taxes, bringing the top state income tax rate down to 3.7% for 2026, which is pretty competitive. The brackets are a bit unique, with a separate rate schedule kicking in for higher earners above $94,700. No local income taxes to worry about, which keeps things clean. Beyond state taxes, you have your standard federal withholding and FICA contributions, and employers handle unemployment insurance on their own without any employee contribution.