Tax Credits for Working Families

Arkansas

Earned Income Tax Credit^

Income Tax Rate: Graduated 1-7 percent

State EITC: No

Notes/News: On March 30, 2011, the Arkansas governor signed into law HB 1056, which creates a credit for Heads of Households with two or more dependents, thus exempting all families below the poverty line from paying state income taxes. This closes a loophole in legislation enacted in 2007 to ensure no working poor family had to pay state taxes.

In 2015, legislators introduced a bill to create a state EITC, but the measure failed to pass a committee vote.

Reports/Materials: Arkansas State & Local Taxes, from Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, Institute on Taxation and Economic Policy, January 2013

8 Principles to Guide Tax and Budget Policy, Arkansas Advocates for Children & Families, January 2013

Arkansas: State and Local Taxes in 2007, Institute on Taxation and Economic Policy, November 2009

Child Tax Credit^

State Credit:

No

Child and Dependent Care Tax Credit^

State Credit: Yes

Refundable: Yes

Tax Credit Eligibility: Same as federal child and dependent care credit eligibility1

Tax Credit Formula: 20 percent of the federal child and dependent care credit2

Notes/News: Taxpayers claim the credit by completing line 39 of form AR1000 and attaching a copy of their federal child and dependent care credit form.

The refundable credit is only available for care of a child under age six in an “approved child care facility.” Arkansas also has a nonrefundable credit of 20 percent of the federal CDCTC with the same maximum payments.

Property Tax Circuit Breaker^

Circuit Breaker: No

Reports/Materials: Idea 9: Enact a Property Tax Circuit Breaker,” Sarah Beth Coffey and Alan Essig, Center for a Better South, Doing Better: Progressive Tax Reform for the American South, June 2006