Governor Sarah Huckabee Sanders issued a proclamation on Thursday, April 30, calling the Arkansas General Assembly into an Extraordinary Session, which started May 4.
The governor called the session to, according to the proclamation, “amend the individual income tax brackets and rates to a top rate of 3.7%, effective January 1, 2026, and following tax years.” The proclamation further states that the session is also to cover the amendment of “income tax brackets and rates for domestic and foreign corporations to a top tax rate of 4.1%, effective January 1, 2027, and following tax years…”
Previously, the top individual income tax rate was 3.9% and the top corporate income tax rate was 4.3%.
Taxes in Arkansas have steadily decreased since 2015. Legislators have cut taxes in each major session and multiple special sessions, reducing the top personal income tax rate from 7% and the top corporate income tax rate from 6.5% in 2015.
Proponents of the tax cut say that it is important to keep lowering income taxes for the state to maintain economic competitiveness. Critics have shared concerns that such a tax cut will not provide much benefit for most Arkansans and would make the state more reliant on sales taxes.
On Monday, the Senate’s Revenue and Tax committee reviewed Senate Bill 1, sponsored by Senator Jonathan Dismang, which outlined the proposed tax rates for individuals and corporations.
The committee heard from several citizens who spoke against the bill. Committee members thanked them for their testimony and stated that the current bill does not diminish any services.
The committee voted “do pass,” which is a formal action indicating the committee supports the bill and wants to move it to the full Senate chamber for a vote.
Day two of the special session began with the full Senate meeting to discuss and vote on Senate Bill 1.
Senators Clarke Tucker and Greg Leding spoke against the bill. Senator Matt McKee spoke in favor.
The Senate passed the bill and transmitted it to the House for further discussion and vote.
The Senate Revenue and Tax committee met briefly and voted “do pass” on House Bill 1001, which is identical to the Senate bill, sending it to the full Senate for a vote the following day.
The Senate then passed the bill 27-6 on Wednesday morning to send for the governor’s signature.
After the vote, the body honored the senators who are serving their final terms. Senators Fred Love, Reginald Murdock, Kim Hammer, Greg Leding, Blake Johnson, and Jane English were recognized with humor and heartfelt tributes from their fellow senators.
Accomplishing its goals, the First Extraordinary Session of the 95th Senate was adjourned sine die by Lt. Governor Leslie Rutledge, the President of the Senate, after a motion by President Pro Tempore Bart Hester.
Wednesday afternoon, Governor Sanders signed the tax bills into law. Arkansas income tax rates are now at their lowest levels since the tax was enacted in 1929.
