Arkansas Governor Sarah Huckabee Sanders recently signed legislation that lowers Arkansas’ income tax rate from 4.4 percent to 3.9 percent. The new law also reduces the state’s top corporate income tax rate from 4.8 percent to 4.3 percent. It will provide $500 million in tax relief for Arkansas workers.  

This latest round of tax cuts will help hardworking Arkansas residents cope with inflation and the rising cost of living. It will also make Arkansas more competitive with surrounding states.  

Opportunity Arkansas: Key to Advancing this Tax Cut

Opportunity Arkansas (OA), a nonprofit policy organization that launched just two years ago in the state, was instrumental in helping state leaders advance this legislation.  

In November 2023, Opportunity Arkansas published a first-of-its-kind research paper on how to phase out the state’s income tax, providing policymakers with 6 specific strategies for accelerating the phase down. The report pointed out that with a substantial budget surplus, there has never been a better time to phase out the tax.  

OA also published four in-depth blog posts on the state’s income tax, which were used to educate key policymakers in the Legislature and the Governor’s Office on the need for and support for additional income tax cuts. The organization also obtained unique, never-before-seen data from the state revenue department, revealing to policymakers and the public that  

1. Two-thirds of Arkansans currently pay the top tax rate and therefore benefited from the tax cuts.  
2. Nearly half of Arkansans (lowest income) already pay no income tax at all.
3. All taxpayers, including those making as little as $24,300, would receive an equal tax cut.  

Polling was also a component of Opportunity Arkansas’ campaign to provide tax relief. OA conducted five comprehensive polls on income tax relief, the results of which indicated wide support for reducing income tax rates. They used this polling to guide policymakers on the most effective messages with voters and distributed these results to key allies in the Governor’s Office and legislative leadership. The media also covered Opportunity Arkansas’ work on the income tax, with features in Axios, Forbes, the Arkansas Democrat Gazette, and The Center Square.   

And finally, Opportunity Arkansas provided legislative testimony, shared personal stories of Arkansans needing tax relief, and promoted their messages through social media, radio, and their (non) Debatable newsletter.  

Phasing Out Arkansas’ Income Tax: A Key Goal of Opportunity Arkansas 

Eliminating the income tax to help families in the state is a key goal of Opportunity Arkansas. Since OA launched in late 2022, Arkansas has adopted three separate rounds of significant income tax cuts—and thanks to their efforts, the state is on a positive trajectory towards phasing out the state income tax completely.  

Nicholas Horton, the Founder and CEO of Opportunity Arkansas, added:  

“This win has proven the concept that income tax cuts work, and that phasing out Arkansas’s personal income tax is financially achievable and beneficial to taxpayers. Additionally, it has demonstrated that Arkansas’s income tax relief has generated economic growth and continued positive fiscal results for the state, as demonstrated in growing revenues, budget surpluses, and improved recognition from a major credit rating agency.

Finally, it has also shown that the Arkansas approach is replicable in other states, and that returning money to hardworking taxpayers is good public policy.” 

Related Reading:  

Pathway to Prosperity: How to Phase Out Arkansas’ Work Punishing Personal Income Tax 
Opportunity Arkansas 

3 Things to Know about the Next Round of Income Tax Reform 
Opportunity Arkansas  

Arkansas Enacts Fourth Tax Cut in Less than Two Years 
Tax Foundation