The proposed bill aims to reduce income tax rates for individuals, trusts, estates, and corporations in Arkansas, with specific changes set to take effect for tax years beginning on or after January 1, 2026, and January 1, 2027. For individuals, trusts, and estates, the bill introduces a new income tax structure that includes a tiered rate system based on net income, with rates ranging from 0% to 3.7% for those earning less than or equal to $94,700. Additionally, it establishes a bracket adjustment for those earning between $94,701 and $97,600, allowing for a reduction in the calculated tax based on specific income thresholds. The bill also mandates annual adjustments to the tax tables.

For corporations, the bill outlines a new income tax structure for both domestic and foreign corporations starting in 2027. Domestic corporations will be taxed at rates ranging from 1% on the first $3,000 of net income to 4.1% on income exceeding $11,000. Similarly, foreign corporations will face the same tiered tax rates on their net income. These changes are designed to simplify the tax structure and potentially lower the tax burden for various entities operating within the state.

Statutes affected:
HB 1001: 26-51-201(a), 26-51-205(a), 26-51-205(b)
Act 1: 26-51-201(a), 26-51-205(a), 26-51-205(b)