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Arkansas | Tax Credits for Working Families

Tax Credits for Working Families

Arkansas

Earned Income Tax Credit^

Income Tax Rate: Graduated 1-7 percent

State EITC: No

Notes/News: Governor Mike Beebe and the Arkansas General Assembly have continued to reduce the state’s grocery tax as the preferred way to provide low-income tax relief. They cut the tax from 6 percent to 3 percent in 2007, and again down to 2 percent in 2009. Arkansas Advocates for Children and Families is encouraging the creation of a state EITC as a better, more targeted way to provide low-income tax relief.

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.

Reports/Materials: Arkansas tax system should do more for working families, Arkansas Advocates for Children & Families, October 2013

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

Fix the Low Income Tax Threshold Problem and Exempt All Low-Income Families from State Income Taxes (HB 1056), Arkansas Advocates for Children & Families, January 2011

Rabid Refunds: Refund Anticipation Loans and High Tax Preparation Fees Are Picking the Pockets of Arkansas’s Working Families, Arkansas Advocates for Children and Families, September 2009

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

A State EITC for Arkansas’s Working Families: Giving Credit Where It’s Long Overdue, Arkansas Advocates for Children and Families, March 2008

Tax Relief for Low-Income Arkansans: What are the options?, Arkansas Advocates for Children and Families, January 2007

Is it Time for an Arkansas Earned Income Tax Credit?, Arkansas Advocates for Children and Families, December 2004

Articles: State Should Create Earned Income Tax Credit, Arkansas News, November 20, 2006

Report Tells Ways to Build State Up By Assisting the Poor, Michael Rowett, Arkansas Democrat-Gazette, September 13, 2003

Children’s Advocacy Group Holds Legislative Meetings, Melissa Nelson, The Associated Press, August 23, 2003

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