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Arkansas Wage and Payroll Tax Facts

February 01, 2024

Having to comply with unique state taxes and wage laws can make processing payroll doubly daunting. Here’s everything you need to know about these rates and laws for the state of Arkansas.

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The state of Arkansas requires a higher minimum wage rate than the rate required by the federal government in the Fair Labor Standards Act (FLSA). The state's Tipped Minimum Wage rate and Actual Tip Credit rate are similarly higher than their federal counterparts.

When it comes to processing payroll, Arkansas-based organizations must handle the following taxes in addition to those required by the federal government:

The below information was last updated August 15, 2024. It is not intended as legal or tax advice.

Arkansas Minimum Wage Rates

Wage Type

Arkansas Rates

Federal Rates

Minimum Wage

$11.00

$7.25

Tipped Minimum Wage

$2.63

$2.13

Actual Tip Credit

$8.37

$5.12

Arkansas State Income Tax (SIT) Rates

Arkansas' SIT is progressive, meaning it adjusts based on the income level of the employee paying the tax.

Income Tax Bracket
[Over X] - [But not over Y]		 2024 Income Tax Rate
$0 - $5,299 0.00%
$5,300 - $10,599 2.00% of excess over $5,300 minus $105.98
$10,600 - $15,099 3.00% of excess over $10,600 minus $211.97
$15,100 - $24,999 3.40% of excess over $15,100 minus $272.37
$25,000 - $89,600 3.90% of excess over $25,000 minus $522.36
$89,601 or greater 3.90% of excess over $89,601 minus corresponding adjustment amount

 

Additional Arkansas SIT Details

Supplemental Withholding Computation

 4.70%

Valid Filing Statuses
  • 0 = No personal exemptions
  • S = Single
  • MS = Married; filing separately
  • MJ = Married; filing jointly
  • H = Head of Household

Exemptions (rate)

 Number of dependents
Exemption (individuals)
  • Agriculture (3 or fewer employees)
  • Work by duly ordained, commissioned, or licensed ministers in the exercise of their ministries, or by a member of a religious order performing duties required by the order
  • Domestic service in a private home, local college club, or local chapter of a college fraternity or sorority
  • Payments to U.S. citizens for employers outside the U.S.
  • Combat zone compensation
  • Payments to newspaper carriers under age 18 delivering to customers
  • Newspaper sellers (service performed by an individual selling newspapers or magazines under certain arrangements)
  • Work not in the course of an employer's trade or business, unless wages are $150 or more or if payment is not in cash
  • Noncash tips or cash tips of less than $20 per month
  • Nonresident interstate carrier employees
  • Nonresident military spouses

Form W-4

 Form AR4EC

Reconciliation Frequency

 Annual

Arkansas State Unemployment Insurance (SUI) Rates

SUI provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined by state law) and meet the state’s eligibility requirements.

Arkansas SUI Tax Details

Taxable Wage Base

$7,000

Employee Subject to Tax

No

Rates for Experienced Employers

0.0225% – 10.125%

Rates for New Employers

2.025%*

Effective Period

Calendar Year

Voluntary Contributions Allowed

Yes; through March 31 

*This includes the 1.90% base rate and the required 0.125% Administrative Assessment tax.

Arkansas State Disability Insurance (SDI) Rates

SDI benefits are funded by employees through mandatory payroll deductions from each paycheck. Arkansas, however, doesn't require employers to collect an SDI tax.

Miscellaneous Arkansas Tax Information

Reciprocal Agreement(s)

Reciprocal agreements are when workers who live and work in different states are only required to pay taxes to the state where they live. Arkansas currently has a unique reciprocal agreement with Texas that only applies to the towns of Texarkana, Arkansas, and Texarkana, Texas.

  • Texarkana, Arkansas residents are exempt from Arkansas' SIT, but they must file an income tax return and provide their employer with Form AR-TX to certify residency and exemption.
  • Texarkana, Texas residents are exempt from Arkansas' SIT, but only on wages earned in Texarkana, Arkansas. These residents must pay Arkansas' SIT on wages earned anywhere else in Arkansas.

Paid Sick Leave (PSL) Taxes

The state of Arkansas doesn’t require employers to collect PSL taxes, nor does the state have a program providing such leave to employees.

Paid Family and Medical Leave (PFML) Taxes

The state of Arkansas doesn’t require employers to collect PFML taxes, nor does the state have a program providing such leave to employees.

Arkansas Employer Registration

The agencies below can help with your state-based employer registration, including best practices, account numbers, and unemployment information. Contact the Division of Finance & Administration for withholding tax topics and the Division of Workforce Services for unemployment tax topics.

Registration Details

Department of Finance & Administration

Division of Workforce Services

Phone

 (501) 682-1895 (501) 682-3798

Online Registration

 Arkansas Taxpayer Access Point Homepage Tax 21 Employer Registration Page

Registration Instructions

 Online registration options are available, and account numbers will be issued in 5-7 days via the online process. Online registration options are available, and account numbers will be issued during the online process.

Employer Self-Service Login

 Arkansas Taxpayer Access Point Homepage Tax 21 Login Page

Additional Arkansas Payroll Tax Resources

 

This information is provided as a courtesy and may be updated at any time. It is not intended as legal or tax guidance. If you have questions or concerns, we encourage you to seek the advice of a qualified CPA, tax attorney, or advisor.

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