Taxation

With Arkansas being one of the few states to pass the balanced-budget amendment, this makes it a smart place to start and grow a business. The State’s low cost business environment has helped it to secure jobs and population growth.

Corporate Income Tax

Taxable Income --------- Tax Rate
First $3,000 ------------ 1%
Next $3,000 ------------ 2%
Next $5,000 --------------- 3%
Next $14,000 -------------- 5%
Next $75,000 -------------- 6%
Over $100,000 ------------- 6.5%

Property

Cutter Morning Star………...0.0525
Fountain Lake………………….0.0384
Hot Springs……………………..0.0457
Jessieville…........................0.0423
Lake Hamilton………………....0.0442
Lakeside………………………....0.0453
Mountain Pine………………....0.0435
* No state property tax, local tax based on school districts

Sales and Use

City of Hot Springs……….……1.5%
Garland County……………………1.5%
State of Arkansas……..……....6.5%
Total……………………....……9.5%

Hotel Occupancy ................5.0%

Personal Income Tax Rate (Effective January 1, 2019)

Incomes less than $21,000 per year

$0-$4,299 0.0%
$4,300-$8,399 2.0%
$8,400-$12,599 3.0%
$12,600-$20,999 3.4%

Incomes between $21,000-$75,000*

$0-$4,299 0.75%
$4,300 - $8,399 2.5%
$8,400 - $12,599 3.5%
$12,600 - $20,999 4.5%
$21,000 - $35,099 5.0%
$35,100 - $75,000* 6.0%

Incomes greater than $75,000

$0-$4,299 0.9%
$4,300 - $8,399 2.5%
$8,400 - $12,599 3.5%
$12,600 - $20,999 4.5%
$21,000 - $35,099 6.0%
$35,100 and above 6.9%

*for incomes over $75,000, the tax rate for income from $21,000 to $35,099 is 6% and the tax rate for income greater than $35,100 is 6.9%

Incomes between $75,000 and $80,000 shall reduce the amount of income tax due by deducting a bracket adjustment as set forth below:

$75,001 - $76,000 -------------- $440
$76,001 - $77,000 -------------- $340
$77,001 - $78,000 -------------- $240
$78,001 - $79,000 -------------- $140
$79,001 - $80,000 -------------- $40
$80,001 and above --------------$0

Unemployment Insurance Tax

New Businesses

Taxable wage base = $10,000
Rate = 3.2%

A business with no previous employment record in Arkansas is taxed at 3.2% on the first $10,000 of each employee’s earnings until an employment record is established, usually within three years.

Existing Arkansas Businesses

Rate = 0.1% - 14.0%

Each business’ 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.

Corporate Franchise Tax

Franchise Tax Type------- Current Rate

Corporation/Bank with Stock 0.3% of the outstanding capital stock; ----- $150 minimum

Corporation/Bank without Stock ----- $300

Limited Liability Company ----------- $150

Insurance Corporation Legal Reserve Mutual, Assets Less Than $100 million ----- $300

Insurance Corporation Legal Reserve Mutual, Assets Greater Than $100 million ----- $400

Insurance Company Outstanding Capital Stock Less Than $500,000 ----------- $300

Insurance Company Outstanding Capital Stock Greater Than $500,000 -------- $400

Mortgage Loan Corporation 0.3% of the outstanding capital stock; ---------- $300 minimum

Mutual Assessment Insurance Corporation ------------ $300