Corporate Income Tax
Taxable income is apportioned according to a single-sales factor formula.
Sales Tax Rates
State sales tax is 6.5% of the gross receipts from the sales of tangible personal property and certain selected services. “Sale” includes the lease or rental of tangible personal property.
Tangible personal property purchased from outside the state of Arkansas for use, storage or consumption within the state of Arkansas is taxed 6.5% compensating use tax.
Exemptions for Sales and Use Tax
Local Sales & Property Tax Rates
Local sales tax rates are competitive with comparable cities across the state.
There is no state property tax in Arkansas. Local property tax revenues fund public schools in Mississippi County. Basis for property taxes is 20% of the market value of real and personal property and the average annual value of merchants' stocks and/or manufacturers' inventories based on millage rates in individual school districts.
Arkansas Freeport Law
No inventory tax. No property tax for finished inventories of manufactured goods destined for customers outside of the state.
Arkansas’ Freeport Law Act 269 (1969) states: “Tangible personal property in transit for a destination within this State shall be assessed only in the taxing district of its destination. Tangible personal property in transit through this State and tangible personal property manufactured, processed or refined in this State and stored for shipment outside the State shall, for purposes of ad valorem taxation, acquire no situs in the State and shall not be assessed for taxation in this State.”
Capital Gains Tax Reduction
The Capital Gains Tax Reduction (Act 1173 of 2015) allows for an exemption of 50% net capital gains. Net capital gains exceeding $10 million from a gain realized on or after January 1, 2014, is exempt from the state income tax.
Unemployment Insurance Taxes
Businesses without previous employment record in Arkansas are taxed at 3.1% on the first $7,000 of each employee’s earnings until an employment record is established, usually within 3 years.
Existing Arkansas Business
Each business’s 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.