Taxable income is apportioned according to a single-sales factor formula.
Taxable Income |
Tax Rate |
Taxable Income |
Tax Rate |
|---|---|---|---|
First $3,000 |
1% |
Next $14,000 |
5% |
Next $3,000 |
2% |
Next $75,000 |
6% |
Next $5,000 |
3% |
Over $100,000 |
6.2% |
State sales tax is 6.5% of the gross receipts from the sales of tangible personal property and certain selected services. “Sale” includes the lease or rental of tangible personal property.
Gas
Water
Electricity
Most solid waste disposal
Telephone and prepaid telecommunications
Repair services
Repair and replacement parts for manufacturing machinery are generally taxable. However, one percentage point of sales and use taxes may be refunded for purchases of machinery and equipment or replacement parts purchased to modify, replace, or repair manufacturing machinery and equipment.
Tangible personal property purchased from outside the state of Arkansas for use, storage or consumption within the state of Arkansas is taxed 6.5% compensating use tax.
Exemptions for Sales and Use Tax
Local sales tax rates are competitive with comparable cities across the state.
There is no state property tax in Arkansas. Local property tax revenues fund public schools in Mississippi County. Basis for property taxes is 20% of the market value of real and personal property and the average annual value of merchants' stocks and/or manufacturers' inventories based on millage rates in individual school districts.
No inventory tax. No property tax for finished inventories of manufactured goods destined for customers outside of the state.
Arkansas’ Freeport Law Act 269 (1969) states: “Tangible personal property in transit for a destination within this State shall be assessed only in the taxing district of its destination. Tangible personal property in transit through this State and tangible personal property manufactured, processed or refined in this State and stored for shipment outside the State shall, for purposes of ad valorem taxation, acquire no situs in the State and shall not be assessed for taxation in this State.”
The Capital Gains Tax Reduction (Act 1173 of 2015) allows for an exemption of 50% net capital gains. Net capital gains exceeding $10 million from a gain realized on or after January 1, 2014, is exempt from the state income tax.
Taxable wage base = $7,000
Rate = 3.1%
Businesses without previous employment record in Arkansas are taxed at 3.1% on the first $7,000 of each employee’s earnings until an employment record is established, usually within 3 years.
Rate = 0.1% - 14.0%
Each business’s employment record is determined primarily by its taxable payroll and history of employee voluntary termination. The tax is determined by past experience and the amount of the reserve ratio. The reserve ratio is the excess of contributions paid over benefits charged as related to payroll. The higher the reserve-ratio, the lower the tax rate.