Tax News Update    Email this document    Print this document  

June 26, 2024
2024-1256

Arkansas law lowers personal income tax rate retroactive to January 1, 2024

On June 19, 2024, Arkansas Governor Sarah Huckabee Sanders signed into law S.B. 1 which, retroactive to January 1, 2024, lowers the state's personal income tax rate from 4.4% to 3.9%. The Arkansas Department of Finance and Administration (Department) projects that individual taxpayers will save $384 million in 2025 and $256 million in 2026.

This is the third time in the last 15 months that legislation has been enacted to lower the state's personal income tax rate. SB 549 lowered the personal income tax rate from 4.9% to 4.7% retroactive to January 1, 2023, and SB 8 had lowered the personal tax rate from 4.7% to 4.4% effective January 1, 2024.

Supplemental wages

Effective retroactive to January 1, 2024, the supplemental rate of withholding on bonuses and other irregular wage payments is reduced from 4.4% to 3.9%.

Ernst & Young LLP insights

Employers will need to immediately implement the lower personal income tax rate once the updated withholding formula is released by the Department.

The updated Arkansas withholding formula and tables, once available, will be published here.

* * * * * * * * * *
Contact Information

For additional information concerning this Alert, please contact:

Workforce Tax Services - Employment Tax Advisory Services

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 1996 – 2024, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement