ARKANSAS, USA — Arkansans will owe the state less this year thanks to legislation signed by Governor Asa Hutchinson.
In August 2021, Governor Asa Hutchinson signed legislation dropping the state's income tax to 4.9% effective immediately. It made the state's tax rate the lowest since the 5% income tax rate was introduced in 1929. During Hutchinson's time in office as governor, he entered with the highest income tax rate of 7% and now leaves with the lowest for the state.
"If you had a net taxable income of $20,000, the tax bill will be $226 lower this year, if you had a taxable income of $50,000, your tax bill will be $482 Lower. If you had a taxable income—even if it's combined—the tax bill will be $939 Lower. You add all of this up across taxpayers in Arkansas, so we're $400 million in relief," explained the governor during an August press conference.
Certified public accountant and tax attorney John La Tour welcomes the lower tax rate, especially as neighboring states keep theirs competitive.
"People respond to tax rates," said La Tour. "We need to be aware of what's going on in those states. Because some people in Northwest Arkansas, our tax rates are too high, may decide to move 30 miles over in Oklahoma, or 30 miles into Missouri where they have more favorable tax situations."
During his August press conference, Governor Asa Hutchinson also signed into law a drop in corporate tax rates from 5.9% to 5.3%.
"People looking to make investments in Arkansas. That's one of the first things they're going to look at," said La Tour
While Tax cuts might equate to less revenue for the state, La Tour believes that won't be an issue.
"If we can cut the rates sufficiently, I think revenues will take care of themselves with the influx of new businesses to our area because of the lower tax rates," explained La Tour.
La Tour says Arkansans can start working with CPAs as soon as possible for this year's return. He encourages meeting with a CPA to ensure deductions aren't missed.
Download the 5NEWS app on your smartphone:
Stream 5NEWS 24/7 on the 5+ app: How to watch the 5+ app on your streaming device
To report a typo or grammatical error, please email KFSMDigitalTeam@tegna.com and detail which story you're referring to.