By James W. O’Brien, Esq., Checkpoint News
Arkansas Governor Sarah Huckabee Sanders has signed legislation that reduces the top individual and corporate income tax rates. (L. 2026, S1 (1st Extra. Sess.), effective as stated.)
Individual, Trust, and Estate Rates — Effective January 1, 2026
The legislation establishes a revised graduated rate structure for taxpayers with Arkansas taxable income at or below $94,700. For income ranges between $0-$5,599, 0%; $5,600-$11,199, 2%; $11,200-$15,999, 3%; $16,000-$26,399, 3.4%; $26,400-$94,700, 3.7%.
For taxpayers with taxable income exceeding $94,700, a separate two-tier table applies. For income ranges between $0-$4,700, 2%; $4,701 and above, 3.7%.
Taxpayers with taxable income between $94,701 and $97,600 may deduct a bracket adjustment amount against their computed tax liability, ranging from $290 at the $94,701–$94,800 level and phasing down by $10 in $100 income increments at the $97,501–$97,600 level, reaching $0 for taxable income above $97,600.
The new top individual rate of 3.7% represents a reduction from the prior top rate of 3.9%.
The legislation also includes a conforming amendment subjecting the revised individual rate tables to the state’s existing annual inflation adjustment mechanism.
Corporate Rates — Effective January 1, 2027
The legislation establishes an identical rate structure for both domestic and foreign corporations. For the first $3,000, 1%; for the next $3,000, 2%; for the next $5,000, 3%; and for over $11,000, 4.1%.
The new top corporate rate of 4.1% represents a reduction from the prior top rate of 4.3%.
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