Payroll tax in Arkansas: What employers need to know [Updated 2026]
In this article
The state of Arkansas is known for many things: the gorgeous Ozark Mountains, the lively city of Little Rock, and (perhaps most crucially for business owners) being pretty tax-friendly. This can come as a relief to employers, especially if you're hiring not just in Arkansas, but also in multiple states.
Still, you have many responsibilities when it comes to taxes, including federal obligations—like federal income tax and the FICA taxes levied by the IRS—and state payroll taxes. Dealing with state-level payroll taxes can be extremely complicated since the rates and regulations vary from state to state—and if you don't know the local tax laws, you can find yourself facing stiff penalties.
Despite its tax-friendly business environment, Arkansas is no exception to complex tax laws. Since 2016, the state has been undergoing a series of major tax reforms, so there's a lot to keep track of. Follow along as we break down Arkansas's state payroll tax laws for 2026, including the different types of taxes, their rates, who pays what, and filing deadlines.
The 2 Arkansas payroll taxes
There are two Arkansas state payroll taxes: state unemployment insurance tax—also known as SUTA or SUI—and state income tax. The Arkansas Department of Finance and Administration (DFA) and the Arkansas Department of Workforce Services are both responsible for administering payroll taxes at the state level.
According to the state's new hire reporting requirements, Arkansas employers must report new hires within 20 days of the individual's start date. All new employees must also fill out an AR4EC, which tells employers how much state income tax they should be withholding during each pay period.
Below, we'll review each type of state payroll tax in more detail.
State unemployment insurance tax
Arkansas state unemployment insurance (SUI or SUTA) tax is collected to provide economic security for employees who have recently lost their jobs due to circumstances beyond their control. The Arkansas Department of Workforce Services both collects SUI tax and determines the tax rates employers should pay each year. In 2026, the SUI taxable wage base is $7,000 per employee, and new employers pay a rate of 3.1% for three years, after which the Arkansas Department of Workforce Services assigns them an experience rating and a new tax rate.
Under the Federal Unemployment Tax Act (FUTA), Arkansas employers typically must also contribute to federal unemployment taxes along with state ones.
Who pays | Employer |
|---|---|
Tax rate | New employers: 3.1% Experienced employers: 0.1% to 5.0% (plus annual stabilization assessment) |
Taxable wage limit | First $7,000 per employee per calendar year (2026) |
Maximum tax | Varies based on total rate assigned |
Arkansas income tax
Arkansas residents are responsible for paying federal and state income taxes, and the state has been actively reducing its income tax burden through a series of legislative acts. In 2026, the highest marginal income tax rate is 3.9%, continuing the phased reductions that began with SB 532 in 2024 (which brought the top rate from 4.7% to 4.4%) and continued with further cuts since. The DFA oversees the reporting, collection, and enforcement of Arkansas state income tax, and the rates are based on employees' taxable wages.
Arkansas's tax laws continue to evolve rapidly, so it's crucial for business owners in the state to pay attention to state tax legislation. Employers are responsible for withholding the right amount of state income taxes from each employee's paycheck.
Who pays | Employee |
|---|---|
Tax rate | 0% to 3.9% (2026), based on the employee’s AR4EC form |
Taxable wage limit | No limit |
Maximum tax | No maximum |
Remember: The amount of state income tax each person pays is based entirely on how much they make, as reflected on their AR4EC form. Tax withholding isn't based on their filing status.
Navigating payroll tax laws can be challenging. This is especially true in Arkansas, with its complex and ever-changing tax laws. Fortunately, Rippling's payroll compliance software makes things easy. Rippling automatically calculates your taxes—including Arkansas's frequently changing income tax rates—and submits your tax forms and payments for you, monitoring tax regulations at the federal and Arkansas state levels to ensure you're always compliant. If you're looking to automate even more of the payroll tax process, Rippling PEO takes it a step further: It can register and maintain your state tax accounts for you.
Payroll tax due dates in Arkansas
Arkansas employers must pay state income taxes to the DFA on a monthly basis. Payments must be submitted on the 15th of each month. Employers must also make SUTA payments to the Arkansas Division of Workforce Services on a quarterly basis. The deadlines are as follows:
First quarter (January-March): Due April 30
Second quarter (April-June): Due July 31
Third quarter (July-September): Due October 31
Fourth quarter (October-December): Due January 31
If one of these dates falls on a weekend or a legally recognized holiday, you must complete your tax filing responsibilities by the following business day.
How to submit payroll taxes in Arkansas
Now that we've covered both types of payroll taxes and payment deadlines, you're probably wondering how to remit your payments. The state of Arkansas has a number of options for making a payment. Below, we'll go over your choices.
Enroll in e-Services
Arkansas employers who want a simple, fast, and secure way to manage their payroll taxes should visit the DFA's website. The DFA has an online portal where employers can remit state income tax contributions, and the Arkansas Division of Workforce Services has Tax 21, an online portal where employers can make their SUTA contributions. Each site has instructions about how to set up an account and make your payments, as well as answers to FAQs.
Mail in a check or money order
Unlike many other state tax agencies, the DFA still allows state income tax payments to be made by mail. If you want to mail your payment using a check or money order, you'll need to fill out form AR941M. The check or money order should be made payable to the Department of Finance and Administration and sent to:
Individual Income Tax Section, Withholding Branch, P.O. Box 9941, Little Rock, Arkansas 72203-9941
Rippling's full-service payroll software
Searching for a payment option that's even easier? Look no further than Rippling's payroll software. It's so powerful it practically runs itself. As Arkansas continues to cut its income tax rates, Rippling automatically incorporates those changes—so you're always withholding the correct amount. Rippling files your federal, Arkansas state, and local payroll taxes at the right time with the IRS and the Arkansas Department of Finance and Administration (DFA).
Frequently Asked Questions
Are there local tax laws in Arkansas?
Yes. According to the Arkansas Department of Finance and Administration (DFA), the majority of cities and counties in the Natural State have local taxes. At last count, there were over 300 local taxes! These aren’t collected directly by the municipal or county governments themselves, however. The state collects the money and then distributes it back to the local governments.
What is Arkansas's state income tax rate for 2026?
In 2026, Arkansas’s highest marginal income tax rate is 3.9%—down from 4.4% in 2024. Arkansas has been aggressively cutting its top rate from 6.5% in 2020 to 3.9% in 2026 through a series of legislative acts. Tax withholding in Arkansas is based on the employee’s wages as declared on their AR4EC form, not their filing status. Employers must apply the current rate schedule and update their payroll systems whenever the legislature enacts further rate reductions, which may continue in future years if state revenue thresholds are met.
What’s the border city exemption?
Residents of Texarkana are permitted to claim the border city exemption. In other words, they don’t have to pay any Arkansas income tax on income they earn in the city of Texarkana.
Are nonprofit organizations subject to payroll taxes in Arkansas?
Nonprofits that qualify for a tax exemption under Section 501(c)(3) of the Internal Revenue Code (IRC) are exempt from paying most Arkansas state taxes, including corporate income tax. However, most nonprofits must still pay the state unemployment insurance tax (SUI). Organizations eligible for an exemption under Section 501(c)(3) can choose one of two options for meeting this obligation: They can pay for SUTA like a regular business or select self-insurance.
Disclaimer
Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.
Author
Vanessa Kahkesh
Content Marketing Manager, HR
Vanessa Kahkesh is a content marketer for HR passionate about shaping conversations at the intersection of people, strategy, and workplace culture. At Rippling, she leads the creation of HR-focused content. Vanessa honed her marketing, storytelling, and growth skills through roles in product marketing, community-building, and startup ventures. She worked on the product marketing team at Replit and was the founder of STUDENTpreneurs, a global community platform for student founders. Her multidisciplinary experience — combining narrative, brand, and operations — gives her a unique lens into HR content: she effectively bridges the technical side of HR with the human stories behind them.
Hubs
Explore more
Payroll tax in Indiana: What employers need to know [Updated 2026]
Managing payroll in Indiana? Read our 2026 employer's guide on staying compliant with Indiana payroll tax laws, including the updated 2.95% state income tax rate.
Payroll tax in Kentucky: What employers need to know [Updated 2026]
Managing payroll in Kentucky? Read our 2026 employer's guide on staying compliant with Kentucky payroll tax laws, including the new 3.5% flat income tax rate.
Payroll tax in Georgia: What employers need to know [Updated 2026]
Managing payroll in Georgia? Read our 2026 employer's guide on staying compliant with Georgia payroll tax laws, including the 5.19% flat income tax rate and SUI rates.
Payroll tax in Missouri: What employers need to know [Updated 2026]
Managing payroll in Missouri? Read our 2026 employer's guide on staying compliant with Missouri payroll tax laws, including the updated income tax rate and SUI wage base.
Payroll tax in Delaware: What employers need to know [Updated 2026]
Managing payroll in Delaware? Read our 2026 employer's guide on staying compliant with Delaware payroll tax laws, including the SUI wage base increase to $14,500.
Payroll tax in Iowa: What employers need to know [2026]
Managing payroll in Iowa? Read our employer’s guide on staying compliant with payroll tax laws in Iowa.
Payroll tax in Alaska: What employers need to know [Updated 2026]
Managing payroll in Alaska? Read our 2026 employer's guide on staying compliant with Alaska payroll tax laws, including the UI wage base increase to $54,200.
Dental hygienist salary in Arkansas (2026)
Arkansas dental hygienists earn a median $86,760 per year. Compare salaries by city, percentile, and neighboring states to set competitive offers.
See Rippling in action
Increase savings, automate busy work, and make better decisions by managing HR, IT, and Finance in one place.