Arkansas Retirement Income Tax: A Guide for Seniors (2026)

Arkansas leaves your Social Security check alone and exempts up to $6,000 per person of your other retirement income on top of that.1 That $6,000 is easy to underestimate, because it applies per person rather than per household, and it covers pensions and IRA withdrawals after age 59 1/2. Military retirement pay does better still: Arkansas exempts it in full, with no dollar cap, but a veteran claims that exemption instead of the $6,000 rather than on top of it.1 Everything above the exemption is taxed under a graduated schedule that tops out at 3.9 percent. The Arkansas retirement income tax is built around that one exemption, and the $6,000 cap is small enough that most retirees with a real pension or sizable IRA will still owe something.

This guide breaks down how Social Security, pensions, IRA and 401(k) income, and the senior exemption each work, and where the $6,000 limit actually bites.1

In This Guide

• Arkansas Retirement Income Tax at a Glance
• Arkansas Retirement Income Tax: How It Works
• Social Security
• Pensions, IRAs, and 401(k)s
• The Per-Spouse Exemption
• Putting It Together
• Frequently Asked Questions
• Next Steps

Arkansas Retirement Income Tax at a Glance

Arkansas keeps its retirement rules simple: Social Security is fully out, and almost every other kind of retirement income shares one $6,000-per-person exemption.1 The bucket your income falls into matters less here than how much of it clears that single cap. The table below lays out each source.

Arkansas's graduated income tax tops out at 3.9 percent for the 2025 tax year.1 That top rate has been in effect since the 2024 tax year. Whatever retirement income falls outside the exemptions above is taxed under that schedule.

Arkansas Retirement Income Tax: How It Works

Arkansas builds its system around a single, shared exemption rather than separate tracks for public and private pensions. The Arkansas Department of Finance and Administration treats Social Security as fully exempt, then allows up to $6,000 per taxpayer against employer-sponsored pension and qualified-plan distributions, including traditional IRA withdrawals taken after age 59 1/2 (or on death or disability).1

The key design choice is that the $6,000 is per person, not per return. A married couple who both have retirement income can shelter up to $12,000 combined.1 The cap is the same whether your pension came from a government job or a private employer, but the small size of the exemption means most of a real pension or IRA draw remains taxable.

Military retirement pay is handled on its own track, and more generously. Arkansas exempts military retirement benefits in full, with no dollar cap, along with survivor benefits funded by that retirement pay.1 Act 141 of 2017 added that exemption for tax years beginning in 2018 and rewrote the $6,000 ceiling so that the ceiling expressly does not reach military pay.1 A retired sergeant drawing $32,000 a year in military retirement pay owes Arkansas nothing on any of it.

The two exemptions do not stack, and there is one exception worth knowing. A taxpayer who claims the military exemption is not eligible for the $6,000 exemption on other retirement income, except that a taxpayer whose military retirement or survivor benefit exemption comes to less than $6,000 may exempt additional retirement benefits equal to the difference.1 So a veteran with a $32,000 military pension exempts all of it and claims nothing further; a widow with a $2,000 survivor benefit exempts that and can still shelter $4,000 of pension or IRA income, bringing her to $6,000 in all. That top-up rule came in with Act 358 of 2023, effective for tax years beginning in 2023.1

These rules come from Ark. Code Ann. 26-51-307 as amended through 2023. Arkansas revisits its tax code most sessions, so if you are filing for a later year, confirm the exemption still reads this way with the Arkansas Department of Finance and Administration or a preparer who works with Arkansas veterans.

Social Security

Arkansas does not tax Social Security benefits at all.1 There is no income test and no phase-out, so a retiree with a six-figure pension keeps the same full Social Security exemption as one living on benefits alone.

This is the simplest piece of the Arkansas retirement income tax and one of the most valuable. Because Social Security is excluded before the $6,000 exemption is even applied, your benefits never eat into the cap that shelters your pension or IRA income.1

Pensions, IRAs, and 401(k)s

Here is where the $6,000 cap starts to matter. Arkansas exempts up to $6,000 per person of distributions from employer-sponsored pensions and qualified retirement plans, and the same exemption covers traditional IRA withdrawals taken after age 59 1/2.1 Anything above $6,000 is taxed under the graduated schedule. (Military retirement pay runs on its own track: it is exempt in full, as covered above, and is claimed instead of this $6,000.)

Two features are worth pinning down. First, the IRA and 401(k) treatment hinges on age: distributions qualify for the exemption when taken after 59 1/2 (or on death or disability), so an early withdrawal does not get the break. Second, the exemption is shared across all of these sources for a given person. If you draw $4,000 from a pension and $5,000 from an IRA in the same year, you do not get two $6,000 exemptions; you get one $6,000 exemption against the $9,000 combined, leaving $3,000 taxable.1

If you are weighing how much to draw from these accounts to cover care, retirement accounts for care walks through the tradeoffs.

The $6,000 Exemption Per Spouse

The detail that trips up couples is that the $6,000 exemption is granted per person, and each spouse gets a separate $6,000.1 On a joint return, that means up to $12,000 of combined pension, qualified-plan, and IRA income can be exempt, but only if each spouse has retirement income in their own name.

The exemption does not transfer between spouses. If one spouse has a $20,000 pension and the other has none, the couple gets a single $6,000 exemption against that pension, not $12,000.1 To use the full $12,000, both spouses need qualifying retirement income, which is one reason couples sometimes look at how retirement accounts are titled well before they retire.

Putting It Together

The practical takeaway is that Arkansas is not a zero-tax state for retirees with meaningful pension or account income. Social Security comes out cleanly, the $6,000 per-person exemption shaves a slice off everything else, and the rest is taxed at a top rate of 3.9 percent.1

Picture a married couple, both retired, with $30,000 in combined Social Security and $40,000 in additional retirement income split as a $25,000 pension for one spouse and a $15,000 IRA draw for the other. The Social Security is fully exempt. Each spouse applies their own $6,000 exemption, so $12,000 of the $40,000 comes out, leaving $28,000 exposed to the graduated schedule.1 At the 3.9 percent top rate the tax on that exposed amount would be under roughly $1,100, and likely less once the lower brackets are counted. The figures here are hypothetical and shown only to illustrate how the per-person exemption works; they are not a real case and not a prediction of your own outcome.

This is general information rather than personalized tax advice. The two rules that most often change the math are settled: the $6,000 exemption is granted per person, and IRA distributions qualify for it only when taken after age 59 1/2 (or on death or disability).1 What is worth confirming with the Arkansas Department of Finance and Administration or a tax professional is how they land on your own numbers, and whether a later session has changed the exemption for the year you are filing. If retirement savings are part of how you will fund care, building a senior care funding plan is a useful next step.

Next Steps

If you are retired in Arkansas, the math starts with one number: the $6,000 per-person exemption.1 Everything else follows from how much of your income clears it.

• Confirm the Social Security exemption applies; it carries no income limit.
• Apply the $6,000 exemption per person against your pension, qualified-plan, and IRA income.1
• Check the age-59 1/2 rule if your income comes mostly from IRA or 401(k) withdrawals.
• Title accounts so both spouses qualify if you want the full $12,000 combined exemption.1

If you are mapping out how to pay for care, how to pay for senior care covers the main routes.

Learn More

Find personalized help making sense of the Arkansas retirement income tax at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.