Overall Rating for Middle-Class Families: Mixed tax situation
Arkansas has one of the trickiest tax pictures across the country, and if you’re living here, I think you can agree with this statement, too. The average combined rate in Arkansas is 9.51 percent since the state has a 6.5 percent levy, and localities can bring about as much as 5.125 percent.
Groceries are taxed here at 0.125 percent, and although it seems to be a small percentage when compared to other states, people can expect additional local taxes to it. Motor vehicles are also taxed. If the purchase price is more than $3,999, a 7 percent tax rate is active (starting in 2022, this rate will be 3.5 percent, so be patient). Luckily, prescription drugs are fully exempt.
But how about income taxes? Well… the lowest rate is 2 percent applied on taxable income between $4,500 and $8,899 from those with net income less than $22,200. If your next income is between $22,200 and $79,300, a 0.75 percent is applied on the first $4,499 of taxable income.
The highest rate has its tricks, too: 3.4 percent is applied on taxable income ranging from $13,400 to $22,199 for those with net income less than $22,200. Another percentage (5.9) is applied on taxable income between $37,200 and $79,300 for those with net income between $22,200 and $79,300. Those who have net income over $79,300 will face a 5.9 percent rate on table income over $8,000.
If you want to buy a home in Arkansas, note that the median property tax rate is $612.