When it comes to choosing a spot to retire, there are a lot of great options in the United States, and Arkansas is always one destination that rises to the top of conversations. Retirement in Arkansas means living around mountains and lakes and enjoying beautiful weather most months of the year. This allows perfect chances for hiking, fishing, boating, golfing and more. The other big draw to living in Arkansas as a retiree is the affordable cost of living, including low housing prices and a nice economy. However, one area that is worrisome is the taxation in Arkansas. Here is a look at tax information you need to know before considering retirement in Arkansas.
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- Tax Rates - The state of Arkansas has the 14th highest state and local tax burden in the U.S. The total that they pay per year is $3,351 per capita for the two taxes combined. Furthermore, Arkansas ranks 11th in the nation when the subject is taxing the poor. Arkansas residents below the poverty level, making less than $16,000 a year, pay double the percentage of their income in taxes than those wealthy residents who make more than $357,000 a year. The residents in poverty paying this higher tax includes the lower 20 percent of the entire state's population.
- Social Security Benefits - There are seven states that have no income tax at all. However, there are 29 other states that exempt all Social Security benefits from taxation. Arkansas is among those states.
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- Retirement Income - When it comes to retirement income and benefits, the state of Arkansas does tax those, but the state also exempts up to $6,000 in retirement income from the state income tax. This includes military, civil service, local, and state government as well as private pensions. If a retiree received railroad retirement benefits, those are completely exempt. These exemptions count for retirees who are at least 59 1/2 years of age or older. People choosing to move to Arkansas from another state for retirement are also eligible for the exemption.
- Property Taxes - The state of Arkansas ranks very well when it comes to both cost of living and the value of housing, which are both well below national levels. However, they are also very well regarded when it comes to their low property tax rates. The state ranks 35th in the U.S. when it comes to property taxes, making it very affordable to own a retirement home in Arkansas.
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