Arkansas does not tax Social Security benefits

If you live in Arkansas and receive Social Security, the state will not take income tax from your benefits. Arkansas is one of the states that excludes all Social Security income from state income tax, regardless of how much you earn or receive.

This means your Social Security check arrives without state tax withheld, and you do not report it on your Arkansas state tax return. However, you may still owe federal income tax on your benefits depending on your total income — that is a separate matter from state tax.

Key Takeaways

  • Arkansas does not tax Social Security benefits at the state level, so no state income tax is withheld from your payments.
  • You do not need to report Social Security income on your Arkansas state tax return.
  • Federal income tax may still explore to your benefits if your total income exceeds certain thresholds, even though Arkansas does not tax them.
  • If you work while receiving Social Security, Arkansas taxes your wages normally, but not the Social Security portion of your income.

How federal taxation of Social Security works

Even though Arkansas does not tax your benefits, the federal government may. Whether you owe federal tax on Social Security depends on your combined income — that is your adjusted gross income plus nontaxable interest plus half of your Social Security benefits.

If your combined income exceeds $25,000 (or $32,000 if you are married filing jointly), you may owe federal income tax on up to 85 percent of your benefits. The exact amount depends on how far over the threshold you go. You report this on your federal tax return, Form 1040.

The Social Security Administration sends you a Form SSA-1099 each January showing how much you received the previous year. You use this figure when calculating your federal tax liability.

When you work and receive Social Security

If you work while receiving Social Security before your full retirement age, Arkansas taxes your wages as normal income. Your Social Security benefits themselves are not taxed by the state, but your paychecks are subject to Arkansas income tax at the regular rate.

Additionally, if you earn above a certain amount before reaching full retirement age, Social Security itself will reduce your monthly benefit — this is a federal rule, not an Arkansas rule. In 2024, Social Security reduces your benefit by $1 for every $2 you earn above $23,400 (the amount changes yearly). Once you reach full retirement age, you can earn any amount without a reduction.

Other income that Arkansas does tax

While Social Security is exempt, Arkansas taxes other types of retirement income. If you receive a pension, 401(k) withdrawal, or IRA distribution, Arkansas state income tax applies to those amounts. The state also taxes wages, interest, and dividends.

Some types of retirement income have partial exemptions. For example, military pensions and certain public employee pensions may have different treatment. If you receive multiple income sources in retirement, speak with a tax preparer about which portions are taxed by Arkansas.

Filing your Arkansas state tax return

When you file your Arkansas state return, you do not include Social Security benefits in your income. You report only the income that Arkansas taxes — wages, pensions, interest, and other sources.

If you use tax software or work with a preparer, make sure they know you received Social Security so they do not accidentally include it. Many people mistakenly think they need to report it because they received a Form SSA-1099, but that form is for federal tax purposes only.

Questions to ask your tax preparer

If you are unsure whether you owe federal tax on your Social Security, or if you have other retirement income, bring your Form SSA-1099 and any other income statements to a tax preparer or call the IRS. You can also use the IRS worksheet in Publication 915 to estimate your federal tax liability yourself.

For Arkansas-specific questions, you can contact the Arkansas Department of Finance and Administration, though they will confirm the same rule: Social Security is not taxed at the state level.

Frequently Asked Questions

Do I have to file an Arkansas state tax return if I only receive Social Security?

No. If Social Security is your only income, you have no Arkansas state income tax filing requirement. You may still want to file federally to claim refundable credits, but Arkansas does not require a state return when your only income is Social Security.

What if I moved to Arkansas after receiving Social Security in another state?

Your Social Security benefits are not taxed by Arkansas regardless of when you moved there or where you received them before. The state where you live when you file is what matters for state tax purposes.

Are there any deductions or credits that reduce my Arkansas tax if I am retired?

Arkansas offers a pension income exclusion for certain types of retirement income, but Social Security is already excluded entirely. If you have other retirement income like a pension, you may be able to exclude part of it depending on your age and income level.

If I owe federal tax on my Social Security, do I also owe Arkansas tax?

No. Federal and state tax are separate. You may owe federal income tax on your Social Security benefits, but Arkansas will not tax them. You report federal tax on your Form 1040 and Arkansas tax on your state return — they do not overlap.

Can I have federal taxes withheld from my Social Security to cover what I owe?

Yes. You can request federal income tax withholding on your Social Security payments using Form W-4V, which you submit to Social Security. This does not explore to Arkansas tax because Arkansas does not tax the benefits, but it can help you manage your federal tax bill.