Arkansas Itemized Deductions: Categories, Limits, and Records

Arkansas itemized deductions are the specific expenses you can subtract from your state taxable income instead of taking the standard deduction, and they are worth claiming whenever your qualifying costs beat a fairly low floor. For 2025, the Arkansas standard deduction is $2,470 per taxpayer or $4,940 for a married couple filing jointly. If you own a home, had a serious medical year, or gave meaningfully to charity, you probably clear that number without much trouble.

You report everything on Form AR3 and attach it to your Form AR1000F or AR1000NR. The categories on that form are medical and dental, taxes, interest, contributions, casualty and theft losses, post-secondary education tuition, and miscellaneous.

Itemizing in Arkansas Is a Separate Choice From Federal

You do not have to make the same election on both returns. Arkansas allows you to take the federal standard deduction and still itemize at the state level, or the reverse. Because the state standard deduction is so modest, the state itemizing math often works out even when the federal numbers point the other way. Run both calculations and pick the better result for each return.

Medical and Dental Expenses

You can deduct unreimbursed medical and dental costs that exceed 10% of your adjusted gross income. Only the amount above that floor counts. On an AGI of $50,000 with $8,000 of qualifying medical bills, the first $5,000 is lost to the floor and $3,000 is deductible.¹

Qualifying costs include payments to doctors, dentists, and surgeons, prescription medications, health insurance premiums paid with after-tax dollars, and long-term care premiums. Anything an employer or insurer paid for you does not count. The 10% threshold is higher than the 7.5% federal floor, so the state deduction mainly helps in years with a major event like surgery, extended treatment, or significant dental work.

Mortgage and Investment Interest

Mortgage interest on a primary or second home is deductible, along with deductible points paid at closing and investment interest. Arkansas generally follows the federal cap through its conformity provisions, so interest is deductible on the first $750,000 of acquisition debt ($375,000 if married filing separately).² Home equity debt interest is deductible only when the borrowed funds went to buy, build, or substantially improve the home securing the loan.

If you pay mortgage interest to an individual rather than a bank, you can still deduct it, but you have to list the lender’s name and address on Form AR3.¹

Real Estate and Personal Property Taxes

Form AR3 lets you deduct the real estate taxes and personal property taxes you actually paid during the year. There is no state-level cap. The federal SALT limit does not apply to what you claim on your Arkansas return, though it still matters when you coordinate the two filings.

Charitable Contributions

Arkansas adopts the federal charitable rules under 26 U.S.C. § 170 as of January 1, 2019.³ Cash gifts to qualifying charities are generally deductible up to 60% of AGI. Donations of appreciated property such as stocks or real estate are typically capped at 30% of AGI. Contributions above the annual limit carry forward for up to five years on the Form AR3 carryover line.

The recipient has to be a qualified organization under 26 U.S.C. § 501(c)(3) or another section the IRS recognizes. For any cash gift, keep a bank statement or receipt. For cash gifts of $250 or more, you need a written acknowledgment from the charity by the time you file.⁴

Casualty and Theft Losses

This is where Arkansas is noticeably more generous than the federal return. Federally, personal casualty losses are deductible only when the loss stems from a federally declared disaster.⁵ Arkansas imposes no such restriction. Losses from fire, storm, shipwreck, other casualties, or theft are deductible on your state return as long as insurance did not cover them.

Two floors apply. Each individual loss has to exceed $100 before any part counts, and your total qualifying losses for the year must exceed 10% of your net income. Only the amount above that threshold is deductible.⁶ Report losses on Form AR4684 and attach it to Form AR3.

Miscellaneous Deductions With the 2% AGI Floor

The federal Tax Cuts and Jobs Act suspended miscellaneous itemized deductions, and the One Big Beautiful Bill extended that suspension. Arkansas never adopted the change. Expenses in this category remain deductible on your state return to the extent they exceed 2% of your AGI.⁷

The most common item is unreimbursed employee business expenses, reported on Form AR2106 and carried to Form AR3. Others include tax preparation fees, investment advisory fees, and safe deposit box rental when used to store taxable securities. Business expenses, medical costs, interest, taxes, losses, charitable contributions, and artistic donations are excluded from this category because they have their own rules.⁷ If you have real unreimbursed work expenses, this line is easy to overlook because it no longer exists federally.

Tuition and Volunteer Firefighter Expenses

Form AR3 has a separate section for miscellaneous deductions that are not subject to the 2% floor. The two significant items are post-secondary education tuition and volunteer firefighter expenses.¹ For tuition, you report qualifying college or university payments on Form AR1075 and carry the amount to Form AR3. Both reduce taxable income dollar for dollar with no percentage threshold to clear.

Donations of Your Own Art, Writing, or Music

Arkansas has a deduction specifically for creators who donate their own work. You can deduct the fair market value of the piece, but only if you meet all four of these conditions:

At least 50% of your income for the current or prior tax year comes from your art-related profession.
An independent appraiser approved by the Department of Finance and Administration verifies the fair market value, and you attach the appraisal to your return.
The work is donated to and accepted by a museum, art gallery, or 501(c)(3) nonprofit located in Arkansas.
The deduction does not exceed 15% of your gross income for the year of donation.

This is separate from the general charitable contribution deduction and sits on its own line of Form AR3.⁸ The income test and the in-state recipient rule narrow the field, but for working Arkansas artists donating locally it can be substantial.

Where Arkansas and Federal Rules Part Company

Three differences matter most when you are deciding what to claim at the state level:

The medical floor is 10% of AGI in Arkansas, versus 7.5% federally.¹
Casualty losses do not require a federally declared disaster.⁵
Miscellaneous deductions subject to the 2% floor still exist for Arkansas purposes even though they are suspended federally.

Arkansas gets to differ because it adopts specific Internal Revenue Code sections as of fixed conformity dates rather than mirroring every federal change. Business expenses conform to 26 U.S.C. § 162 as in effect on January 1, 2019, and charitable contributions to § 170 on the same date.³

Records to Keep

Keep documentation for at least three years from the date you filed or two years from the date you paid the tax, whichever is later. Records tied to a worthless securities loss should be kept for seven years.⁹

What you need depends on the deduction:

Medical: explanation of benefits statements, pharmacy receipts, and insurance premium invoices showing your out-of-pocket cost.
Interest: Form 1098 from your lender, or the lender’s name and address if you pay an individual.
Charitable: written acknowledgment for gifts of $250 or more, plus a bank statement or receipt for any cash gift.
Casualty: photos of damage, insurance correspondence, repair estimates, and police reports for theft.
Employee expenses: receipts, mileage logs, and evidence that your employer did not reimburse you.

Penalties for Overclaiming

Claiming deductions you are not entitled to, or inflating what you did pay, can trigger penalties at both the state and federal level. The IRS imposes a 20% accuracy-related penalty on any underpayment resulting from negligence or a substantial understatement of income tax.¹⁰ Intentional fraud is handled under a separate provision with stiffer consequences. Arkansas can assess its own penalties and interest on improper state-level deductions. Claim what you paid, keep the receipts, and when a figure feels like a stretch, leave it off.

1
Arkansas Department of Finance and Administration (DFA). 2024 AR3 Itemized Deductions
2
Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction
3
Justia. Arkansas Code 26-51-419 (2024) – Deductions
4
Internal Revenue Service. Charitable Organizations: Substantiation and Disclosure Requirements
5
Internal Revenue Service. Publication 547 (2025), Casualties, Disasters, and Thefts
6
Cornell Law School. 1.26 Ark. Code R. 51-424(a)(1) – Losses
7
Justia. Arkansas Code 26-51-437 – Deductions – Miscellaneous Itemized Deductions
8
Justia. Arkansas Code 26-51-422 (2024) – Deductions – Fair Market Value of Donated Artistic, Literary, and Musical Creations
9
Internal Revenue Service. How Long Should I Keep Records
10
Office of the Law Revision Counsel. 26 U.S. Code 6662 – Imposition of Accuracy-Related Penalty on Underpayments