Arkansas Legislation That Modifies Tax Brackets, Decreases Top Rate Enacted

Beginning in 2020, Arkansas tax brackets are modified to provide reductions for individual, trust, and estate taxpayers. In addition, the enacted legislation repeals a trigger for reduced income tax rates based upon collections from out-of-state sellers.

Bracket Changes for Tax Years Beginning in 2020

For tax years beginning on or after January 1, 2020, the tax rates for taxpayers with a net income of less than $22,200 are:

• – 0% on the first $4,499 of income;
• – 2% on income from $4,500 up to $8,899;
• – 3% on income from $8,900 up to $13,399; and
• – 3.4% on income from $13,400 to $22,199.

For taxpayers with a net income greater than or equal to $22,200 but less than or equal to $79,300, the tax rates are:

• 0.75% on the first $4,499 of income;
• 2.5% on income from $4,500 up to $8,899;
• 3.5% on income from $8,900 up to $13,399;
• 4.5% on income from $13,400 up to $22,199;
• 5% on income from $22,200 up to $37,199; and
• 5.9% on income from $37,200 up to $79,300.

For taxpayers with a net income greater than $79,300, the tax rates are:

• 2% on the first $4,000 of income;
• 4% on income from $4,001 up to $8,000;
• 5.9% on income over $8,001 up to $79,300; and
• 6.6% on income over $79,300.

Further, taxpayers with net income greater than $79,300 but not more than $84,600, will reduce the amount of income tax due by deducting the following bracket adjustment amounts:

• $440 for incomes between $79,301 and $80,300;
• $340 for incomes between $80,301 and $81,300;
• $240 for incomes between $81,301 and $82,500;
• $140 for incomes between $82,501 and $83,600;
• $40 for incomes between $83,601 and $84,600; and
• $0 for incomes over $84,600.

Bracket Changes for Tax Years Beginning in 2021

For tax years beginning January 1, 2021, the bracket for taxpayers with a net income greater than $79,300 are further modified, as follows:

• 2% on the first $4,000 of income;
• 4% on income from $4,001 up to $8,000; and
• 5.9% on income over $8,000.

Act 182 (S.B. 211), Laws 2019, effective February 19, 2019, and applicable as noted

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