The most recent reduction in tax was in the General Assembly’s Special Session in June of this year. The top corporate tax was reduced from 4.8% to 4.3%, as well as the individual income tax rate being reduced from 4.9% to 3.9%. The Arkansas General Assembly and Governor Sanders have passed three tax cuts since January 2023. Scott Hardin, Spokesperson for the Department of Finance and Administration, says the growth in the Arkansas economy is allowing the state to cut down tax rates. They expect the economy to further flourish with this decrease, while putting more money in taxpayers’ pockets.
“Outperforming expectations. Last year, we had 700 million more collected on the state level than we anticipated. We had a 700 million surplus. So, when we cut taxes, it’s not as if we’re saying we’re cutting services, or any critical services are denied. It’s simply growth in the economy, and that’s the way those taxes are cut. The state of Arkansas is doing well.” This will translate roughly to an extra $250 million remaining in taxpayers’ pockets every year.
“While we’re reducing taxes over here, growth in the economy is allowing us to have revenue surpluses. So, we still have revenue coming in. It’s not as if we’re – again – we’re not cutting services saying we’re not funding this. It’s just a matter of allowing the economy to flourish, as we’re cutting taxes.”
Impact on Business Investments
Nima Zarbin, the owner of Texas-based Zarbin Asset Management, says lower tax rates in Arkansas will benefit their investments. “As much migration as we’re seeing from the West Coast, you know, California predominately, and from the East Coast somewhat from New York, it makes sense. There’s only so much land volume in Dallas, Fort Worth, Houston, Austin. If somebody is priced out that’s trying to migrate in the Texas market, well, the next best place to go is a state like Arkansas.”
The Department of Finance and Administration says Arkansas is becoming more competitive with neighboring states by creating an environment that encourages businesses to come to the state while allowing ones that are already here to expand.
