SBE - Small Business & Entrepreneurship Council
07/13/2024 | Press release | Archived content
Pro Entrepreneur, Pro Small Business Tax Relief in Arkansas
By SBE Council at 13 July, 2024, 3:06 pm
by Raymond J. Keating -
Arkansas lawmakers just recently extended a streak of implementing positive tax relief.
Specifically, the state's top marginal income tax rate on individuals was reduced in 2024 from 4.4 percent to 3.9 percent. For good measure, Arkansas has a 50 percent exclusion for most capital gains, which means the individual capital gains tax rate has been reduced from 2.2 percent to 1.95 percent. By the way, as recently as 2015, the state's top individual tax rate was 6.9 percent.
Moreover, Arkansas' corporate income tax rate has been reduced this year from 4.8 percent to 4.3 percent. Again, this rate is notably lower than the 6.5 percent rate prevailing in 2015.
Reducing the state's personal income, capital gains and corporate income tax rates rank as a trifecta for entrepreneurs and small business.
Most businesses aren't C corporations, and therefore, pay the personal income tax. At the same time, most C corps are small businesses. And finally, the capital gains tax is a direct tax on the returns on entrepreneurship and investment.
Reducing these tax rates means reduced costs on and increased incentives for starting up and building businesses.
By the way, to her credit, it was reported that Arkansas Gov. Sarah Huckabee Sanders would continue to look for opportunities to phase out the state's income tax. That is a worthy goal that, if accomplished, would make Arkansas one of the top states in which to live, and to startup and operate a business.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist, The Weekly Economist II:52 More Quick Reads to Help You Think Like an Economist and The Weekly Economist III: Another 52 Quick Reads to Help You Think Like an Economist.