Arkansas state and local tax rates stack a 6.5% state sales tax with county and city add-ons that can push the total past 12% at the register, a graduated income tax topping out at 3.7% in 2026, and property taxes calculated on just 20% of a property’s market value. Special rates apply to groceries, vehicles, alcohol, and fuel, and Social Security income is fully exempt from state tax.
Sales Tax: State Plus Local
The state sales and use tax is 6.5% on most tangible goods, digital products, and a broad list of services, from vehicle and appliance repair to dry cleaning, cable television, pest control, and lodging.1Arkansas Department of Finance and Administration. Sales and Use Tax FAQs2Justia Law. Arkansas Code 26-52-301 – Tax Levied If an out-of-state seller doesn’t collect it, you owe the same 6.5% as use tax on your state return.
Counties and cities layer their own sales taxes on top, each one approved by local voters.3Justia Law. Arkansas Code 26-74-201 – Purpose Local rates generally run between 0.5% and about 6%, with no statutory cap on the combined local rate for most purchases. Narrow exceptions exist for motor vehicles, aircraft, watercraft, and manufactured housing.1Arkansas Department of Finance and Administration. Sales and Use Tax FAQs
Stacked together, you’ll pay around 7% to 8% in lower-tax areas and anywhere from 11% to nearly 13% in cities with multiple local levies. The actual rate turns on the ordinances in the exact jurisdiction where the sale happens, so crossing a county line can change the price of the same item. The Department of Finance and Administration publishes current city and county rate tables.4Arkansas Department of Finance and Administration. City and County Sales and Use Tax Rates
Reduced Rates on Groceries, Vehicles, and Alcohol
Groceries get the biggest break. The state rate on food and food ingredients is 0.125%, well below the standard 6.5%. The reduced rate covers items bought for home preparation and excludes prepared foods, candy, soft drinks, and tobacco. Local sales taxes still apply at full local rates on groceries. Legislation proposed in early 2025 would have eliminated even the 0.125% state grocery tax effective January 1, 2026; confirm its status with the Department of Finance and Administration before relying on it.
Vehicle sales use a tiered structure, with the tax paid at registration rather than at the dealership. For new vehicles, no state sales tax is due below $4,000; at $4,000 or above, the full 6.5% applies.5FindLaw. Arkansas Code 26-52-510 – Payment of Tax on Motor Vehicles by Consumers Used cars, trailers, and semitrailers have an extra tier: no state tax under $4,000, a reduced 3.5% rate from $4,000 to $9,999, and the full 6.5% at $10,000 and up.6Arkansas Department of Finance and Administration. Recent Changes in the Law The 3.5% reduction applies to state tax only; local tax runs at the full local rate regardless of price.
Alcohol runs heavier. On top of standard sales tax, Arkansas charges a 10% supplemental tax on gross receipts from alcoholic beverage sales, plus an additional 4% supplemental tax that doesn’t apply to beer or wine.7Justia Law. Arkansas Code 3-9-213 – Gross Receipts and Supplemental Taxes on Sale of Alcoholic Beverages A bottle of spirits effectively carries 14% in supplemental tax before base sales tax and local levies.
Back-to-School Sales Tax Holiday
Arkansas suspends state and local sales tax for one weekend each summer. The 2026 holiday runs from 12:01 a.m. Saturday, August 1 through 11:59 p.m. Sunday, August 2.8Arkansas Department of Finance and Administration. Arkansas Sales Tax Holiday Instructions During that window, no sales tax is collected on:
- Clothing and footwear priced under $100 per item
- Clothing accessories and equipment priced under $50 per item
- School supplies, art supplies, and instructional materials on the DFA’s published list, with no price cap
Items at or above the thresholds remain fully taxable.
Individual Income Tax
Arkansas uses a graduated income tax, and the top marginal rate drops to 3.7% beginning January 1, 2026.9Arkansas House of Representatives. Tax Cuts Passed in Special Session Which rate schedule applies depends on whether your net taxable income is above or below roughly $89,600.10Justia Law. Arkansas Code 26-51-201 – Individuals, Trusts, and Estates
If your net taxable income is $89,600 or less, rates climb through five tiers: 0% on the first $5,299, then 2%, 3%, and 3.4% on the middle ranges, reaching the top rate once income exceeds $25,000. If your income is above $89,600, a two-tier table applies: 2% on the first $4,500 and the top rate on everything else. A bracket adjustment credit phases out between $89,601 and $92,700 to smooth the transition.
The standard deduction for 2025 was $2,470 per taxpayer and $4,940 for married couples filing jointly. A proposal to raise it to $4,400 for 2026 did not pass in the 2025 session, so check the DFA’s forms for the current figure.
Retirement Income
Social Security benefits are fully exempt at any income level. For other retirement income, Arkansas exempts the first $6,000 per year of benefits from an employment-related plan, including pensions, 401(k)s, profit-sharing plans, and annuity plans. Both public and private plans qualify, but traditional IRAs don’t count unless an employer set up the IRA as a simplified employee pension. Military retirement pay based on length of service also gets a $6,000 exemption; military disability pensions are fully exempt with no cap.11Arkansas Administrative Code. 26 CAR 100-118 – Retirement Plans and Disability Benefits
Property Tax
Property is assessed at 20% of market value statewide.12Arkansas Department of Finance and Administration. Frequently Asked Questions A home worth $200,000 has an assessed value of $40,000, and local taxing authorities apply their millage rate to that figure.
Millages vary by location because they combine school district, county, and city levies. The statewide average total is about 48.90 mills: school districts average 38.66 mills, counties 7.92 mills, and cities 4.12 mills.13Arkansas Department of Finance and Administration. 2024 Millage Report At that statewide average, a $200,000 home would owe roughly $1,956 per year before credits.
Homeowners who live in their property can claim the homestead property tax credit. Starting with 2026 bills, the maximum rises to $600, up from $500.14Arkansas Department of Finance and Administration. Property Tax Relief The credit comes off your bill directly and only applies to your actual residence.
Corporate and Fuel Taxes
C corporations pay a graduated state income tax on Arkansas net income: 1% on the first $3,000, 2% from $3,001 to $5,000, 3% from $5,001 to $11,000, and 4.3% above $11,000.15Arkansas Economic Development Commission. Corporate Income Tax Rates in Arkansas The brackets are narrow enough that any meaningfully profitable corporation hits the 4.3% top rate quickly.
Motor fuel carries a per-gallon state excise tax built into the pump price: $0.247 on gasoline and $0.285 on diesel under the most recent published rates. Federal fuel taxes apply on top.