Real & Personal Property

Arkansas does not have a state-imposed property tax. Property taxes are assessed at the county and municipality levels and are administered by the state.

Land and buildings are taxed as real property based upon market value. Agricultural lands are taxed as real property based upon production. Machinery, equipment, and business inventories are taxed as personal property based upon average selling price. Arkansas' assessment ratio is 20%.

Personal Property must be assessed between January 2 and May 31 at the Sebastian County Assessor's office.

Assessor's Office

Sebastian County Courthouse
Greenwood, AR 72936
Phone: 479-996-6591

• Real Property:
  Rate $8.50/$1000 appraised value
  Assessed at 20% of appraised value

• Personal Property:
  Rate $8.54/$1000 appraised value
  Assessed at 20% of appraised value

The State of Arkansas does not levy property taxes and the school millage is included in the above real and personal property tax rates. The assessor's office uses its own depreciation schedule.

Sales Tax

Taxable services include sales of gas, water, electricity, telephone and telegraph service, repair services, and cable television service.

The Arkansas compensating use tax of 6.000 percent is levied on tangible personal property purchased from outside the state of Arkansas for use, storage, or consumption within the state of Arkansas. The exemptions of sales tax apply to the use tax.

City: 1.0% ($25 maximum)
County: 1.0% ($25 maximum)
State: 6.000%
Grand total of all above taxes: 8.000%

Corporate Franchise Tax

The Arkansas Franchise Tax is an annual tax imposed upon Arkansas corporations for the grant of charter privileges and upon non-Arkansas corporations for the privilege of doing business.

For a corporation incorporated under the laws of the state of Arkansas, the franchise tax if figured by multiplying the number of outstanding capital shares by the par value (if no par stock, $25.00 is used) of those shares then multiplying by 0.0027.

For a corporation incorporated outside of Arkansas but authorized to do business in the state, the assets of the corporation employed in Arkansas are compared to the corporation's total assets. The resulting percentage is multiplied by 0.0027 to obtain the franchise tax.

If you are organizing a new corporation in Arkansas, you do not need to disclose the total assets of the parent corporation. If you already have a U.S. based corporation and you simply apply for authorization to do business in Arkansas, you need only supply a balance sheet of that U.S. corporation.

Corporations without authorized capital stock shall pay an annual tax of $100.00 regardless of valuation. No corporation shall pay a tax of less than $50.00 or more than $1,075,000.

Corporate Income Tax

Domestic corporations and all foreign corporations doing business within the state are subject to tax on net income at the following rates:

     1) Net taxable income equal to or less than $100,000:

        First $3,000 - 1%
        Next  $3,000 - 2%
        Next  $5,000 - 3%
        Next $14,000 - 5%
        Next $75,000 - 6%; or

     2) Net taxable income greater than $100,000:
		6.5% of the entire net total income

Net income is defined as income reported on the federal return, with certain additions and deductions prescribed by Arkansas law, such as adjustments for state income tax deductions, adjustments for capital gains and losses, and deductions for energy-saving devices purchased for use by the corporation.

If business income is derived from activity inside and outside the state of Arkansas, it is apportioned for taxation according to the percent of property and payrolls utilized in the state and sales attributable to Arkansas pursuant to the multistate tax compact.

Unemployment Insurance Tax

Every industry must pay an unemployment insurance tax. An industry with no previous employment record in Arkansas is taxed at 3.3% on the first $9,000 of each employee's earnings until an employment record is established, usually three to five years.

Each firm's employment record is determined primarily by its taxable payroll and history of employee involuntary 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. Currently, the minimum rate is 0.5 percent and the maximum is 6.4 percent. The average contribution rate for employers in 1996 was 2.0 percent. The average weekly benefit amount in 1996 was $169.97.

Workers' Compensation

In Arkansas, the Workers Compensation Law requires that all employers with three or more employees must carry insurance to cover all reasonable and necessary medical expenses for job-related injuries and job-related illnesses. The insurance is carried by a private company or through a state-approved self-insurance program. The benefits cover a small portion of an individual's salary compensation during the recuperation period.

Changes in the Worker's Compensation laws during the 1993 legislative session have resulted in one of the most comprehensive workers' compensation reform bills in the nation. This legislation makes workers' compensation insurance more affordable for employers. At the same time, the new reforms guarantee that employees will be compensated fairly and thoroughly for compensation claims process.

The new law also establishes a fraud investigation unit, which is designed to address the interest of all parties involved in the workers' compensation claims process.

The two-tiered benefit program provides one tier for permanent-partial disability and one for other types of disabilities. The main goal, however, is to eliminate accidents entirely.

A statewide safety program, an optional deductible up to $2,500, and a narrower definition of compensable injury are other key measures.

Personal Income Tax

Resident individuals, estates, and trusts, and nonresident individuals, estates and trusts deriving income from within the state are subject to a tax on their net income at the following rates:

        Net Taxable                  Net Taxable
          Income         Rate          Income           Rate

        First $2,999     1%         Next $6,000         4.5%
        Next   3,000     2.5%       Next 10,000           6%
        Next   3,000     3.5%       $25,000 or over       7%

To arrive at net taxable income the taxpayer may elect either to itemize deductions or to use the standard deduction of $1,000 or 10 percent of gross income, whichever is less. Federal income tax is not deductible from income subject to Arkansas' personal income tax.

A credit is allowed resident individuals for the amount of income tax paid to any other state not to exceed what the tax would be on out-of-state income if added to the Arkansas income and calculated at Arkansas income tax rates. The following personal tax credits are allowed:

Single individuals, $20; blind taxpayers, additional $20. Head of family, $40. Dependents with gross income of less than $3,000, $20. Fiduciaries, $20.

Additional Information

• Starting a New Business in Arkansas: A Tax Guide for New Businesses
• Moving to Arkansas: A Concise Tax Guide for New Residents

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