Arkansas Withholding Tax 2023 - 2024

Arkansas withholding taxes are a bit different than other states'. This blog post will explain what they are, who must pay them, and how to register for them.

Arkansas requires employers to withhold state income tax from employees’ paychecks. This tax is used to fund the state’s public services and programs. The Arkansas withholding tax rate is 4.9%. The state also taxes residents on their investment income, but the rate is flat at 2.3%.

To determine an employee’s taxable income:

  1. Start by multiplying gross biweekly wages by 26.
  2. Subtract the standard deduction of $2,000 from the result to get the annual wages.
  3. Apply the withholding tables to the annual wages to find out how much to withhold from each pay period.

If an employee has no exemptions, the employer can withhold an additional 0.4% to cover the cost of the state disability insurance program. Alternatively, an employee can claim a personal exemption on their income tax return. In addition, the state does not require employers to collect an unemployment insurance tax.

Arkansas Withholding Tax Report

Like all residents, Arkansas workers pay federal income tax and FICA taxes (Social Security and Medicare). These taxes are withheld by employers from each paycheck. To determine how much to withhold, each worker completes a W-4. You must submit a new W-4 whenever your personal circumstances change. This includes if you get married or remarried, have additional dependents, or if you move to a different state.

In addition to federal and state payroll taxes, Arkansas has many local taxes, including city, county, and school district payroll taxes. Fortunately, Rippling makes paying all your payroll taxes easy by automating your filings and payments.

Arkansas Withholding Tax Registration

Arkansas Withholding Tax Registration

New employers must register with the DFA before starting to withhold by submitting a Withholding Tax Registration Form. Generally, withholding tax reports and payments are due monthly and by the 15th day of the month following the reporting period. However, the DFA can assign a filing frequency based on company size or sales volume. For more information, visit this DFA page. Alternatively, you can also contact the DFA’s Withholding Tax Section directly.

Arkansas Withholding Tax Exemption

Non-resident members are exempt from Arkansas withholding tax if they file an affidavit (Form AR4PT) with the Department indicating their agreement to timely file an individual or trust income tax return and to pay any tax due on that return, together with interest and penalties. The affidavit must include the non-resident member’s name, address, social security number, or federal identification number, and withholding information. The affidavit must be filed on magnetic media by the pass-through entity’s required annual income tax return due date.

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