Arkansas

Act 645 of 2003 repealed the Arkansas estate tax for deaths on or after Jan 1, 2005

“Act 645 of 2003 repealed Arkansas Estate Tax for estates of those who died on or after January 1, 2005. No estate tax return is required by the State of Arkansas for any decedents after December 31, 2004.”

Note: PDF read directly; the full substantive text of FAQ Subject 605 (revised 12/22/2020). Old survey said Subject 705; live source is Subject 605.

Arkansas top income tax rate is 3.9% (TY2025); smoothing zone at $94,701 to $97,800 creates ~13.9% implicit marginal

“The marginal income tax rates for 2025 are 3.9%, as amended in 2024.”

Note: Full bracket schedule (TY2025, same for all statuses): 0% to $5,600; 2% from $5,601 to $11,200; 3% from $11,201 to $16,000; 3.4% from $16,001 to $26,400; 3.9% above $100,000 (and $3,809 + 3.9% for the segment above $26,400). A minus-adjustment table creates a smoothing zone between $94,701 to $97,800 with ~13.9% implicit marginal (phase-out of lower-bracket benefits).

Arkansas: 50% net capital gain exclusion post-netting; gains above $10,000,000 per taxpayer are 100% exempt

“There shall be allowed a deduction from net income an amount equal to 50 percent of net capital gain. Net capital gain in excess of $10,000,000 shall be excluded from Arkansas net income.”

Note: The $10M exemption cap is per TAXPAYER COLUMN on AR1000D (not per joint return). Under Filing Status 4 (married filing separately on same return), each spouse gets their own column with their own $10M exemption. Combined effective AR tax on a very large LT gain: approximately $195,000 maximum. Capital loss limit: '$3,000 ($1,500 per taxpayer for filing Status 4 or 5)' per AR1000F instructions.

Arkansas: 50% net capital gain exclusion post-netting; gains above $10,000,000 per taxpayer are 100% exempt

“There shall be allowed a deduction from net income an amount equal to 50 percent of net capital gain. Net capital gain in excess of $10,000,000 shall be excluded from Arkansas net income.”

Note: The $10M exemption cap is per TAXPAYER COLUMN on AR1000D (not per joint return). Under Filing Status 4 (married filing separately on same return), each spouse gets their own column with their own $10M exemption. Combined effective AR tax on a very large LT gain: approximately $195,000 maximum. Capital loss limit: '$3,000 ($1,500 per taxpayer for filing Status 4 or 5)' per AR1000F instructions.

IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback

“In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year.”

Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged.

AR exempts AR-issued bonds; out-of-state muni bond interest is taxable per Ark. Code §26-51-404

“Interest on obligations of other states and subdivisions are also fully taxable.”

Note: Form AR4 instructions describe the exemption rule under Ark. Code §26-51-404. AR interest on out-of-state bonds is explicitly fully taxable. AR bonds are exempt.

AR exempts AR-issued bonds; out-of-state muni bond interest is taxable per Ark. Code §26-51-404

“Interest on obligations of other states and subdivisions are also fully taxable.”

Note: Form AR4 instructions describe the exemption rule under Ark. Code §26-51-404. AR interest on out-of-state bonds is explicitly fully taxable. AR bonds are exempt.

Arkansas partially conforms to IRC §1400Z-2 QOZ gain deferral and exclusion

“Except as provided in subsection (b) of this section, 26 U.S.C. § 1400Z-2, as in effect on January 1, 2018, regarding opportunity zones, is adopted for the purpose of computing Arkansas income tax liability. As used in this section and for purposes of the adoption of 26 U.S.C. § 1400Z-2, 'opportunity zone' means a population census tract located in Arkansas that is designated as a qualified opportunity zone under 26 U.S.C. § 1400Z, as of January 1, 2019.”

Note: Verbatim text of Ark. Code Ann. §26-51-460(a)(b) enacted by Act 201 of 2019 (SB196), effective for tax years beginning on or after January 1, 2018. Conformity is limited to census tracts in Arkansas designated as QOZs as of January 1, 2019; out-of-state QOF investments in non-AR zones do not qualify for AR deferral or exclusion.

Arkansas conforms to IRC §1202 QSBS exclusion

“Title 26 U.S.C. § 1202, as in effect on January 1, 2017, regarding the exclusion from gain of certain small business stock, is adopted for the purpose of computing Arkansas income tax liability.”

Note: Verbatim text of Ark. Code Ann. §26-51-815(c) enacted by Act 155 of 2017 (HB1390), §24, effective for tax years beginning on or after January 1, 2015. Adoption is as of the IRC in effect on January 1, 2017.

Arkansas exemption limited to 'direct United States obligations'; FNMA and FHLMC are not direct U.S. obligations and their interest is taxable

“Interest you received from direct United States obligations, its possessions, the State of Arkansas, or any political subdivision of the State of Arkansas is exempt from tax.”

Note: The AR1000F/NR instructions (p.9, item 7) and FAQ 201 (https://www.dfa.arkansas.gov/wp-content/uploads/201-InterestReceived.pdf) limit the exemption to 'direct United States obligations.' FNMA and FHLMC are federal GSEs but are not 'direct obligations of the United States'; they are privately chartered corporations without full faith and credit backing and without a federal bondholder exemption statute.

Arkansas DFA FAQ 202 states dividends are ordinary income and fully taxable; the 50% net capital gain exclusion applies only to capital gains from sale or exchange, not dividends

“Ordinary dividends are the most common type of distribution from a corporation and are paid out of the earnings and profits of the corporation. They are ordinary income to you and are fully taxable.”

Note: FAQ 202 verbatim. Arkansas's 50% NCG exclusion (Ark. Code §26-51-815; AR1000D) applies to 'net capital gain' from the sale or exchange of capital assets; not to dividend income. Qualified dividends per IRC §1(h)(11) are a rate category (preferential tax RATE), not capital gains. Arkansas has no equivalent of IRC §1(h)(11); dividends are fully taxable at ordinary rates.

Arkansas top income tax rate is 3.9% (TY2025); smoothing zone at $94,701 to $97,800 creates ~13.9% implicit marginal

“The marginal income tax rates for 2025 are 3.9%, as amended in 2024.”

Note: Full bracket schedule (TY2025, same for all statuses): 0% to $5,600; 2% from $5,601 to $11,200; 3% from $11,201 to $16,000; 3.4% from $16,001 to $26,400; 3.9% above $100,000 (and $3,809 + 3.9% for the segment above $26,400). A minus-adjustment table creates a smoothing zone between $94,701 to $97,800 with ~13.9% implicit marginal (phase-out of lower-bracket benefits).

U.S. Treasury interest exempt from Arkansas income tax: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations

“Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax.”

Note: 31 U.S.C. §3124(a) preempts state income taxation of U.S. government obligations. Covers T-bills, T-notes, T-bonds, TIPS, and I-bonds. Most states allow a deduction or subtraction by statute cross-referencing this federal preemption.

FHLB and FFCB bond interest exempt from Arkansas income tax: federal enabling statutes mandate state tax exemption

“Any security issued under this chapter by a Federal home loan bank, including the stock thereof, shall be exempt from taxation, except taxes upon real estate, by any State, county, municipality, or local taxing authority.”

Note: 12 U.S.C. §1433 (FHLB) and 12 U.S.C. §2023 (FFCB/Farm Credit Act) both mandate state tax exemption for securities issued under their chapters. Contrasts with FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) which have no bondholder exemption statute and whose interest is taxable by income-tax states.

Farm Credit Act: notes, bonds, debentures, and other obligations of Farm Credit Banks are instrumentalities of the United States exempt from all State, municipal, and local taxation

“The mortgages held by the Farm Credit Banks and the notes, bonds, debentures, and other obligations issued by the banks shall be considered and held to be instrumentalities of the United States and, as such, they and the income therefrom shall be exempt from all Federal, State, municipal, and local taxation, other than Federal income tax liability of the holder thereof under the Public Debt Act of 1941 (31 U.S.C. 3124).”

Note: 12 U.S.C. §2023 explicitly covers 'the income therefrom' (i.e., interest payments to bondholders), exempting it from all State and local taxation. The only carve-out is federal income tax on the holder. Parallel to 12 U.S.C. §1433 (FHLB Act), which exempts FHLB securities from state taxation. Together §1433 and §2023 mandate state and local tax exemption for both FHLB and FFCB bond interest. Shared across all jurisdictions: a single object reference satisfies buildCitationIndex() identity check.

IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback

“In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year.”

Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged.

Arkansas top income tax rate is 3.9% (TY2025); smoothing zone at $94,701 to $97,800 creates ~13.9% implicit marginal

“The marginal income tax rates for 2025 are 3.9%, as amended in 2024.”

Note: Full bracket schedule (TY2025, same for all statuses): 0% to $5,600; 2% from $5,601 to $11,200; 3% from $11,201 to $16,000; 3.4% from $16,001 to $26,400; 3.9% above $100,000 (and $3,809 + 3.9% for the segment above $26,400). A minus-adjustment table creates a smoothing zone between $94,701 to $97,800 with ~13.9% implicit marginal (phase-out of lower-bracket benefits).

Arkansas adopted Uniform Community Property Disposition at Death Act (effective August 1, 2023)

“This article may be cited as the 'Uniform Community Property Disposition at Death Act.'”

Note: Arkansas enacted UDCPRDA (the 2021 NCCUSL revised version) via Act 582 of 2023, effective August 1, 2023. Protects the community property character of assets acquired in community property states when a couple moves to Arkansas.

Arkansas conforms to the federal capital-loss base; treatment of an imported pre-residency section 1212 carryforward is a structural inference

“The amount of capital loss that can be deducted after offsetting capital gains is limited to $3,000 ($1,500 per taxpayer for filing Status 4 or 5). If your capital loss was more than the yearly limit on capital loss deductions, you can carry over the unused part to later years until used up.”

Note: The 2025 AR1000F/AR1000NR instructions mirror the federal $3,000 capital-loss cap and section 1212 carryover mechanism verbatim, so Arkansas starts from the federal capital-loss base and the carryover flows through. No published guidance addresses the imported pre-residency carryforward, so that application remains a structural inference.