taxnews.ey.comPrint

30 July 2024

Arkansas releases revised income tax withholding formula for immediate use

The Arkansas Department of Finance and Administration (DFA) announced that it has released updated state income tax withholding tables and a computer formula that employers are required to implement immediately.

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%.

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%. (Arkansas DFA, Withholding Tax Employer's Instructions, p. 4.)

Ernst & Young LLP Insights Employers should consider notifying employees of the reduction in the Arkansas state personal income tax and withholding rate so that employees can determine if they need to submit a revised AR4EC, Employee's Withholding Exemption Certificate.

* * * * * * * * * *
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

Document ID: 2024-1466

 

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