Arkansas does not tax Social Security benefits. Every dollar of Social Security income, whether from retirement, disability, or survivor benefits, is excluded from Arkansas gross income with no cap, no phase-out, and no income threshold. The exclusion is written into state law and applies to every recipient regardless of filing status or how much other income you have.
How the Arkansas Exemption Works
Arkansas Code 26-51-404(b)(6) removes Social Security payments from the definition of gross income for state tax purposes.1Justia. Arkansas Code 26-51-404 – Gross Income Generally Because the money never enters the gross income calculation, it never reaches Arkansas’s tax brackets at all. A retiree collecting $40,000 a year in Social Security gets the same full exemption as one collecting $15,000.
The statute uses the broad phrase “Social Security payments.” The Arkansas Department of Finance and Administration reads that to cover retirement benefits, Social Security Disability Insurance, and survivor benefits, and lists Social Security on its guide to nontaxable income that should not appear on your Arkansas return.2Arkansas Department of Finance and Administration. Nontaxable Income
Railroad retirement benefits get the same treatment. All tiers of railroad retirement income are exempt from Arkansas tax, including Tier I, Tier II, vested dual benefits, and supplemental annuity payments reported on Forms RRB-1099-R and RRB-1099. Private pensions from a railroad company, reported on Form 1099-R, are not railroad retirement benefits for this purpose and are treated like any other private employer pension.2Arkansas Department of Finance and Administration. Nontaxable Income
Federal Tax Can Still Apply
“No Arkansas tax” is not the same as “no tax.” The federal government may still tax a portion of your Social Security, and this is where most retirees get caught off guard.
The IRS calculates a figure called combined income: your adjusted gross income, plus any nontaxable interest, plus half of your Social Security benefits. If combined income exceeds $25,000 for a single filer or $32,000 for a married couple filing jointly, up to 50 percent of your benefits become taxable at the federal level. Above $34,000 for singles or $44,000 for couples, up to 85 percent becomes taxable.
Those thresholds have not been adjusted for inflation since they were set in the 1980s and 1990s, so more retirees cross them each year. If you draw a meaningful pension, take IRA withdrawals, or hold investments that generate income, expect to owe some federal tax on your Social Security even though Arkansas asks nothing.
Do You Even Need to File an Arkansas Return?
Because Social Security is excluded from Arkansas gross income, it does not count toward the state’s filing thresholds. Many retirees whose only income is Social Security fall well below the point at which a return is required.
For the 2025 tax year, a single filer must file an Arkansas return once gross income reaches $14,644. A married couple filing jointly with one or no dependents must file at $24,696, and at $28,723 with two or more dependents.3Arkansas Department of Finance and Administration. Arkansas 2025 Individual Income Tax Forms and Instructions Social Security, railroad retirement, military retirement, and the $6,000 retirement income exemption are all subtracted before you measure your income against these thresholds.
If you do have to file and miss the deadline, Arkansas charges a failure-to-file penalty of 5 percent of the tax due per month or partial month, up to 35 percent.4Arkansas Department of Finance and Administration. Penalty and Interest Charges
What Arkansas Does Tax, and What It Doesn’t
Whatever income remains after exempt items are removed runs through Arkansas’s regular income tax. The top marginal rate for the 2025 tax year is 3.9 percent, following several years of rate cuts. The standard deduction is $2,470 for single filers and heads of household, and $4,940 for married couples filing jointly.3Arkansas Department of Finance and Administration. Arkansas 2025 Individual Income Tax Forms and Instructions These are considerably smaller than the federal standard deduction, so retirees used to seeing most of their income shielded federally may find more exposed on the state side.
Other retirement income is treated as follows:
- The first $6,000 of benefits from any public or private employer-sponsored pension is exempt, regardless of the recipient’s age. If both spouses have pension income on a joint return, each spouse claims a separate $6,000.5Justia. Arkansas Code 26-51-307 – Retirement or Disability Benefits – Definition
- The same $6,000 exemption applies to traditional IRA distributions, but only once you are at least 59½ (with narrow exceptions for death and disability).5Justia. Arkansas Code 26-51-307 – Retirement or Disability Benefits – Definition
- Qualified Roth IRA distributions are fully exempt when the account has been held at least five years and the taxpayer is over 59½.6Arkansas Department of Finance and Administration. Subject 300 Traditional Individual Retirement Accounts (IRAs)
- Military retirement benefits from any branch of the uniformed services are fully exempt with no dollar cap, as are survivor benefits funded by military retirement pay. The full exemption took effect for tax years beginning in 2018 under Act 141 of 2017.5Justia. Arkansas Code 26-51-307 – Retirement or Disability Benefits – Definition
- Arkansas has no state estate tax and no inheritance tax, so your heirs owe Arkansas nothing based on what you leave behind.
Put together, the full Social Security exemption, the generous treatment of military pay, and the partial exemptions for pensions and IRAs make Arkansas a favorable place to collect retirement income. The one place to keep your guard up is the federal return, where Social Security can still be taxed no matter what the state does.