Property taxes are assessed at the county and municipal levels. Land and buildings are taxed as real property based on market value. Agricultural lands are taxed as real property based upon production. Machinery, equipment and business inventories are taxed as personal property based upon average selling price. In Forrest City, the tax rate on real & personal property is $9.26 per $1,000 of appraised value. The rate in St. Francis County is $7.96 per $1,000 of appraised value
Local sales tax is collected in Forrest City. The City sales tax rate is 1%, with a $25 maximum tax on any single purchase. The county sales tax is 2%, with a maximum of $50 on any single purchase.
Corporate Income Tax
Domestic and foreign corporations doing business in Arkansas are subject to tax on net income at the following levels:
Level Net Income %
First $3,000 1.0%
Next $3,000 2.0%
Next $5,000 3.0%
Next $14,000 5.0%
Next $75,000 6.0%
Over $100,000 6.5%
If business income is derived from activity inside and outside of Arkansas, it is apportioned for taxation based on percentage of property and payrolls utilized in the state and sales attributable to Arkansas pursuant to the multi-state compact. Further information on corporate income taxes, including the method of apportioning, may be obtained from the Department of Economic Development.
Personal Income Tax
Residents and non-residents, estates,and trusts deriving income from within the state are subject to a tax on their net income at the following rates:
· 0.9% on the first $4,299 of taxable income.
· 2.4% on taxable income between $4,300 and $8,399.
· 3.4% on taxable income between $8,400 and $12,699.
· 4.4% on taxable income between $12,700 and $21,099.
· 6% on taxable income between $21,100 and $35,299.
· 7% on all taxable income of $35,300 and more.
Sales and Use Tax
The Arkansas sales tax is 6.5% of the gross receipts from the sales of tangible personal property and certain selected services. It is paid by the consumer at the point of final sale, and it includes the lease or rental of tangible personal property. Sales tax on gas and electricity used in the manufacturing process is 0.625 percent. Taxable services include the sale of natural gas, water, electricity, telephone, and repair services.
The Arkansas compensating use tax is 6% on tangible personal property purchased from outside Arkansas for use or consumption within the state. There is a long list of exemptions from the state sales/use tax. Information on these exemptions may be obtained from the state.
Unemployment Insurance Tax
Every business in Arkansas pays an unemployment insurance tax. A business with no previous employment record in Arkansas is taxed at 3.7% on the first $9,000 of each employee’s earnings. After three to five years of operation, the employment record is determined by its taxable payroll and history of employee involuntary terminations. The unemployment tax rate is then computed based on the past experience and the amount of reserve-ratio. The 2001 average for employers was 1.8%.
Corporate Franchise Tax
For a corporation incorporated under the laws of the state of Arkansas, the franchise tax is calculated by multiplying the number of outstanding capital shares by the par value (if no par stock, $25 is used) of those shares, then multiplying by .0027.
For a corporation incorporated outside of Arkansas but authorized to do business in the state, the number of issued and outstanding capital shares is multiplied by the par value to obtain the total value. This value is multiplied by the percentage of assets applicable to Arkansas to obtain the Arkansas capital stock. The resulting figure is multiplied by .0027 to obtain the franchise tax.
Businesses locating in Arkansas do not have to disclose the total assets of their parent corporations. Corporations without authorized capital stock pay an annual tax of $109 regardless of valuation. No corporation shall pay less than $59 or more than $1,075,000.
As a result of extensive reforms implemented in 1993, Arkansas now has one of the most progressive workers compensation programs in the nation. Rates are more affordable for employers, while employees are compensated fairly for compensable injuries. Rates have dropped approximately 40 percent since the 1993 passage of the Workers' Compensation Reform Act.