October 17, 2018

Arkansas: Who Pays? 6th Edition

ARKANSAS

ARKANSAS STATE AND LOCAL TAXES

Taxes as Share of Family Income

					Top 20%
Income Group	Lowest 20%	Second 20%	Middle 20%	Fourth 20%	Next 15%	Next 4%	Top 1%
Income Range	Less than $18,600	$18,600 to $30,600	$30,600 to $48,800	$48,800 to $83,000	$83,000 to $173,800	$173,800 to $422,400	over $422,400
Average Income	$11,200	$25,500	$38,700	$62,700	$112,900	$247,000	$1,129,400
Sales & Excise Taxes	8.9%	8.3%	7.1%	5.4%	4.3%	2.6%	1.3%
General Sales – Individuals	5.2%	5.0%	4.5%	3.5%	2.8%	1.8%	0.9%
Other Sales & Excise – Ind.	1.5%	1.2%	0.8%	0.6%	0.4%	0.2%	0.1%
Sales & Excise on Business	2.2%	2.1%	1.8%	1.3%	1.0%	0.6%	0.3%
Property Taxes	2.2%	1.8%	1.5%	1.6%	1.6%	1.5%	1.0%
Home, Rent, Car – Ind.	2.2%	1.7%	1.4%	1.6%	1.5%	1.2%	0.4%
Other Property Taxes	0.0%	0.1%	0.0%	0.1%	0.1%	0.3%	0.6%
Income Taxes	0.2%	1.4%	2.2%	2.6%	3.4%	4.0%	4.6%
Personal Income Tax	0.1%	1.3%	2.2%	2.6%	3.3%	3.9%	4.4%
Corporate Income Tax	0.0%	0.1%	0.0%	0.1%	0.1%	0.1%	0.2%
TOTAL TAXES	11.3%	11.5%	10.8%	9.7%	9.2%	8.2%	6.9%

Individual figures may not sum to totals due to rounding. Download the table

TAX FEATURES DRIVING THE DATA in Arkansas

Progressive Features	Regressive Features
Graduated personal income tax structure Provides a non-refundable low-income tax credit linked to the federal poverty level	Provides an income tax exclusion equal to 50 percent of capital gains income and fully excludes all gains above $10 million State sales tax base includes groceries, though taxed at a lower rate Local sales tax bases include groceries Fails to provide a refundable Earned Income Tax Credit (EITC) Fails to provide a property tax “circuit breaker” credit for low-income taxpayers Fails to use combined reporting as part of its corporate income tax

Progressive Features

Regressive Features

Graduated personal income tax structure
Provides a non-refundable low-income tax credit linked to the federal poverty level

Provides an income tax exclusion equal to 50 percent of capital gains income and fully excludes all gains above $10 million
State sales tax base includes groceries, though taxed at a lower rate
Local sales tax bases include groceries
Fails to provide a refundable Earned Income Tax Credit (EITC)
Fails to provide a property tax “circuit breaker” credit for low-income taxpayers
Fails to use combined reporting as part of its corporate income tax

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, which measures the impact of each state’s tax system on income inequality, Arkansas has the 20th most unfair state and local tax system in the country. Incomes are more unequal in Arkansas after state and local taxes are collected than before. (See Appendix B for state-by-state rankings and the methodology section for additional detail on the index.)

Note: Figures show permanent law in Arkansas enacted through September 10, 2018, (with tax year 2019 personal income tax rates) at 2015 income levels. Top figure represents total state and local taxes as a share of non-elderly income. The sixth edition of Who Pays does not include the impact of the federal deduction for state and local taxes (SALT) because policy changes in the 2017 federal Tax Cuts and Jobs Act temporarily limited the extent to which the SALT deduction functions as a generalized offset of state and local taxes.