Arkansas taxes income in layers rather than applying one rate to everything. After a $2,200 low-income exemption, each bracket only applies to the slice of income within its range. A worker earning $60,000 pays 2% on dollars 1 through $4,300, then 4% on dollars $4,301 through $8,500, then 4.4% on everything above $8,500.
| Net Income | Rate |
|---|---|
| $0 to $2,200 | 0% (low-income exemption) |
| $2,201 to $4,300 | 2% |
| $4,301 to $8,500 | 4% |
| Above $8,500 | 4.4% |
Arkansas has no state disability insurance (SDI) and no local payroll taxes. The only state-level deduction is the progressive income tax. Federal FICA applies at standard rates: Social Security at 6.2% (up to $176,100) and Medicare at 1.45%. Arkansas's minimum wage is $11.00/hr as of January 1, 2024. Two exemptions stand out for specific workers: Social Security benefits are fully exempt from state income tax, and military retirement income is fully exempt.
Freelancers and independent contractors in Arkansas pay self-employment tax (15.3% on net earnings) on top of state income tax. Use the Self-Employment Tax Calculator to see the full picture including the deductible half.
Single filing status, standard deductions only. No 401(k) or pre-tax benefit deductions included. Arkansas's progressive brackets produce an effective state rate of about 3.5% at this income level.
| Deduction | Annual | Monthly |
|---|---|---|
| Gross Salary | $60,000 | $5,000 |
| Federal Income Tax | −$5,162 | −$430 |
| Arkansas State Tax | −$2,087 | −$174 |
| Social Security (6.2%) | −$3,720 | −$310 |
| Medicare (1.45%) | −$870 | −$73 |
| State Disability (SDI) | None | None |
| Estimated Take-Home | $48,161 | $4,013 |
Tennessee has no income tax on wages. At $60,000 gross, an Arkansas worker pays approximately $2,087 per year in state income tax that a Tennessee worker pays zero. At $100,000, that gap grows to roughly $3,500 per year. The difference is most significant for higher earners where more income falls into Arkansas's 4.4% bracket.
Arkansas's ongoing rate cuts are narrowing this gap year by year. See the Tennessee Paycheck Calculator for a direct comparison on your specific income.
Arkansas reduced its top income tax rate four consecutive years, from 6.9% in 2021 to 4.4% in 2024, with the legislature targeting further reductions. A worker earning $80,000 in 2021 paid roughly $4,400 in state income tax under the old structure. At the same income today, that bill is approximately $3,200.
When rates drop, employer withholding tables update automatically for the following tax year, but mid-year cuts may not be reflected immediately. File an updated Form AR4EC with your employer after any rate change to capture the correct withholding sooner. Workers comparing Arkansas with neighboring states like Oklahoma (4.75% top rate) will find Arkansas now has a lower top bracket.