After last week’s special session by the Arkansas legislature, the state’s income tax rate now sits at 4.4% and the corporate income tax rate sits at 5.8%. In an interview with KARK Channel 4’s Capitol View, Sen. President Pro Tem Bart Hester, R- Cave Springs, said it is possible to see more tax cuts in the future.
“The governor campaigned the entire time on moving the income tax towards zero. That is the posture of the legislature as well, and our past behavior since the governor’s been here, and even including Governor Hutchinson, we continue to cut it down. I suspect you’ll continue to see the same behavior. It wouldn’t surprise me if we didn’t continue to address income taxes in the fiscal session, as long as the state’s revenue stays strong,” he said.
Hester said the tax cuts will go into effect in January of next year. He said the tax credit that is part of the tax cuts will go into effect this year. The one time tax credit will be $150 for individuals and $300 per family. The tax credit will only be available for those making under $90,000 a year.
Democrats disagreed with the tax cuts enacted by the Republicans. Rep. Denise Garner, Democrat of Fayetteville, shared concerns about the timing of the tax cuts.
“We’ve already cut income tax three times in the past 13 months, with a budget cost of $1.6 billion. And that’s just the personal income tax, that’s not the corporate cuts,” she said. “Now we’re adding an additional $250 million burden to the budget at a time when we have critical, unfunded programs and uncertainty about the future cost of LEARNS and the other bills that we passed last session.”
According to the Tax Foundation’s latest income tax ranking that was done in May, Arkansas ranked 37th. The ranking list states from lowest to highest income tax rates. In 2020, Arkansas ranked 40th, with the state moving up in the list each of the past three years as lawmakers have lowered the income tax rate.
