Arkansas sales tax is 6.5% at the state level, with city and county taxes added on top that can push the combined rate above 11% in some areas. The Department of Finance and Administration (DFA) runs the program, and businesses collect the tax from buyers and send it to the state. A major recent change took effect January 1, 2026: the state portion of the tax on groceries dropped to zero, though local grocery taxes often still apply.
The Rate You Actually Pay
The statewide rate is 6.5%, set in Arkansas Code ยง 26-52-301.1Justia. Arkansas Code 26-52-301 – Tax Levied – Definitions Cities and counties add their own on top. A purchase in Fayetteville, for example, carries a 2% city tax and a 1.25% county tax, bringing the total to 9.75%. In some parts of the state the combined rate climbs above 11%.
Arkansas uses destination-based sourcing for local tax, so the rate that applies depends on where the buyer receives the item, not where the seller is located. Ship a product to a customer in another city and you collect tax based on the delivery address.2Arkansas Department of Finance and Administration. Sales and Use Tax FAQs Since 2008, local tax caps on individual transactions no longer apply to most purchases. The exceptions are motor vehicles licensed for highway use, aircraft, watercraft, and manufactured housing, which still have transaction-level caps on local tax.
Groceries After January 1, 2026
Starting January 1, 2026, the state-level tax on food and food ingredients dropped to 0%.3Arkansas Department of Finance and Administration. State Sales and Use Tax Rate Changes This applies to unprepared grocery items, not to restaurant meals or prepared food. Before 2026, the reduced state rate on groceries was 1.375%.
Local city and county taxes on groceries still apply. Depending on where you shop, you could still owe anywhere from about 1% to 4% or more in local tax on your grocery bill. The state change only removes the state portion.
What Arkansas Taxes
The tax covers virtually all tangible personal property sold in Arkansas: clothing, electronics, furniture, vehicles, building materials, and more. Used items are taxable too. Used motor vehicles have their own rate structure. A used vehicle priced between $4,000 and $10,000 is taxed at 2.875% rather than the standard 6.5%.1Justia. Arkansas Code 26-52-301 – Tax Levied – Definitions
Arkansas also taxes a wider range of services than many states. The Gross Receipts Tax Rules list cleaning, lawn care and landscaping, pest control, security and alarm monitoring, locksmith work, body piercing and tattooing, boat storage, and armored car transportation, among others.4Cornell Law Institute. Arkansas Code R. Agency 006, Div. 05 – Gross Receipts Tax Rules Utilities such as electricity, water, and natural gas are taxable as well.
Digital products are taxed too. Downloaded software, streaming media, e-books, and similar items fall under “specified digital products,” and the state’s remote seller and exemption statutes treat them the same as tangible property.5Justia. Arkansas Code 26-52-111 – Remote Sellers and Marketplace Facilitators
Exemptions
Several categories of transactions are exempt from the gross receipts tax:
- Sales for resale, when the buyer provides a valid Streamlined Sales Tax exemption certificate or an equivalent state-approved form.6Justia. Arkansas Code 26-52-401 – Various Products and Services
- Sales made directly to the United States Government.
- Sales by churches and charitable organizations, as long as they are not operating a for-profit business. This covers the organization’s own sales, not its purchases.
- Gasoline and motor fuel on which the state motor fuel tax has already been paid.
- Food sold in public school and college cafeterias operated primarily for students and teachers and not for profit.
A common misconception is that every 501(c)(3) nonprofit is automatically exempt on its purchases. It isn’t. Under Act 1007 of 2025, a limited purchase exemption now exists for qualified nonprofits, but only for organizations with an annual operating budget under $200,000 that perform community-based charitable services in Arkansas. Even for those that qualify, the exemption excludes motor vehicles, computers, cell phones, televisions, appliances, building materials, alcohol, and tobacco. Larger nonprofits do not qualify for this purchase exemption at all. Sellers should verify a buyer’s exemption certificate before skipping collection and keep those certificates on file in case of an audit.
Use Tax on Out-of-State Purchases
When you buy something from outside Arkansas and the seller doesn’t collect Arkansas sales tax, you owe use tax at the same 6.5% state rate plus any applicable local taxes.7Arkansas Department of Finance and Administration. Consumer Use Tax This comes up most often with online purchases, catalog orders, or items bought while traveling.
If you paid sales tax to another state, Arkansas gives you a credit for that amount. You only owe the difference if the other state’s rate was lower. Businesses that pull inventory off the shelf for their own use owe use tax on those items too. The obligation is self-reported, and it doesn’t go away just because no one sent you a bill.
Remote Sellers and Marketplaces
Out-of-state sellers must collect and remit Arkansas sales tax once they cross either of two thresholds in the current or previous calendar year: $100,000 in sales delivered into Arkansas, or 200 separate transactions.5Justia. Arkansas Code 26-52-111 – Remote Sellers and Marketplace Facilitators Meeting either one triggers the obligation.
Marketplace facilitators such as Amazon, Etsy, and Walmart follow the same rules. When a facilitator handles the transaction, collection is the platform’s duty, and the individual seller doesn’t count those facilitated sales toward their own threshold.8Arkansas Department of Finance and Administration. Remote Sellers and Marketplace Facilitators If you sell both through a marketplace and through your own website, you still need to collect tax on the direct sales yourself.
The Annual Sales Tax Holiday
Arkansas holds a sales tax holiday on the first weekend of August each year. In 2026, it runs from 12:01 a.m. on Saturday, August 1 through 11:59 p.m. on Sunday, August 2. During that 48-hour window, both state and local sales tax are suspended on qualifying items:9Arkansas Department of Finance and Administration. Arkansas Sales Tax Holiday – August 1 and 2, 2026 Instructions
- Clothing and footwear priced under $100 per item
- Clothing accessories and equipment priced under $50 per item
- School supplies
- School art supplies
- School instructional materials
The price caps apply per item, not per transaction. A $90 pair of shoes qualifies; a $110 pair does not. Electronics are not included despite what some lists online suggest. Sellers of qualifying items cannot collect state or local tax during the holiday period regardless of how the sale is made.
If You Run a Business: Permits, Filing, and Penalties
Getting a Permit
Every business making taxable sales in Arkansas needs a sales tax permit before its first transaction. Registration costs $50, paid electronically with the application through the Arkansas Taxpayer Access Point (ATAP).10Arkansas Department of Finance and Administration. Register for a Tax Account11Arkansas.gov. Arkansas Taxpayer Access Point (ATAP) You’ll provide your legal business name, federal EIN (or SSN for sole proprietors), physical address, ownership type, NAICS industry code, start date, and an estimate of monthly gross receipts. That estimate helps the DFA assign your filing frequency. Display the permit at your place of business, or keep it accessible if you sell online.
Filing and the Vendor Discount
Filing frequency depends on sales volume. Monthly filers submit returns by the 20th of the following month.12Arkansas Department of Finance and Administration. Due Dates Businesses with lower revenue may be placed on a quarterly or annual schedule. All filing happens through ATAP.
Arkansas offers a vendor discount of 2% of the tax due, capped at $1,000 per month, as compensation for collecting and remitting on time. The cap also applies separately to local tax accounts, up to $1,000 per city or county reported. A business filing across multiple local jurisdictions can keep a meaningful amount each period simply by staying on schedule. File late and the discount disappears.
Penalties for Late Filing
Missing a filing deadline triggers a penalty of 5% of the unpaid tax for each month or partial month the return stays unfiled, up to 35%.13Code of Arkansas Rules. 26 CAR 30-1218 – Penalties If a failure-to-file penalty is assessed, the state won’t stack an additional failure-to-pay penalty on the same amount. The DFA will waive penalties where the delay was caused by reasonable circumstances rather than willful neglect, but you’ll need to demonstrate that.
Record Retention
Businesses must keep all sales tax records for at least six years, unless the DFA provides written notice that the records are no longer needed.14Code of Arkansas Rules. 26 CAR 30-1211 – Record Keeping and Record Retention That includes invoices, exemption certificates, purchase records, and filed returns. If the DFA audits you and you can’t produce the records, you lose the ability to contest whatever the auditor determines you owe.
Closing an Account
When you stop making taxable sales, notify the DFA and formally close your sales tax account through ATAP. File a final return for the remaining period, report and pay any outstanding tax, and account for any inventory or fixtures you sold or kept. Leaving the account open without filing creates a trail of delinquent returns that generate penalties automatically. The DFA doesn’t assume you’ve closed just because returns stop arriving.