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July 30, 2024
2024-1466

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.

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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
 

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