Arkansas paychecks in 2026: what changed

Arkansas cut its income tax for 2026. Here is what changed.

The changes

• New federal withholding tables. The IRS updated Publication 15-T for 2026, including changes from the 2025 tax law. The standard deduction is $16,100 single, $32,200 married filing jointly, and $24,150 head of household.
• Social Security wage base: $184,500 (up from $176,100). If you earn more, Social Security stops later in the year.
• Tips and overtime deductions for 2025–2028 — see below.
• Top rate: 3.7%, down from 3.9%, passed in a May 2026 special session and applied from January 1.
• Withholding formula: $2,470 standard deduction and a $29 credit per AR4EC exemption.
• Minimum wage: still $11.00, the rate since January 1, 2021.

Tips and overtime in 2026

New federal deductions apply for 2025 through 2028: up to $25,000 for qualified tips, and up to $12,500 ($25,000 for joint filers) for the extra "half" of time-and-a-half overtime. Both phase out above $150,000 of income ($300,000 joint).

These are deductions on your tax return. Your employer still takes Social Security and Medicare out of tips and overtime, and still withholds income tax unless you tell it otherwise. If you expect to claim them, you can put the expected amount in Step 4(b) of your W-4 (and in the Step 4(b) box above) so less income tax is withheld during the year.

Work out your 2026 Arkansas paycheck →

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Sources

• IRS Publication 15-T (2026), Federal Income Tax Withholding Methods — Worksheet 1A and the annual percentage-method tables
• IRS Publication 15 (2026), Employer's Tax Guide — Social Security and Medicare rates
• Social Security Administration — 2026 wage base of $184,500
• IRS — tips and overtime deductions
• Arkansas Department of Finance and Administration — Withholding Tax Formula Method (Effective 01/01/2026) — $2,470 standard deduction; $50 midrange below $100,001; rates 0%–3.7% with adjustment amounts; round the annual gross tax; $29 personal credit per AR4EC exemption; worked example ($2,127 monthly, 2 exemptions → $36.50)
• Arkansas DFA — Form AR4EC, Employee's Withholding Exemption Certificate (R 12/04/2025) — 1 exemption for yourself, 2 for yourself and spouse or head of household, 1 per dependent; without a form the employer withholds without exemptions; low-income tax rate box
• Arkansas DFA — Withholding Tax Instructions for Employers (revised 4/27/26) — current withholding rate 3.7%; bonuses and commissions may be withheld at 3.7%; §125 cafeteria plan and 401(k) amounts are not wages subject to withholding
• Arkansas DFA — Withholding Tax Low Income Tax Tables (Effective 01/01/2026) — separate wage-bracket tables for employees who qualify for the low-income rates
• Arkansas House of Representatives — Tax Cuts Passed in Special Session (May 8, 2026) — HB 1001 (Act 1) and SB 1 (Act 2): individual top rate reduced to 3.7% beginning January 1, 2026
• Arkansas DFA — fiscal impact statement, SB 1 (2026 First Extraordinary Session) — 3.7% on net income of $26,400 and over, tax year 2026 and after
• Arkansas DFA — Income tax withholding tables adjusted due to most recent tax cut (July 15, 2024) — previous top rate cut from 4.4% to 3.9%
• Arkansas Department of Labor and Licensing — Minimum Wage and Overtime — $11.00 since January 1, 2021, for employers with 4 or more employees; tipped cash wage $2.63; overtime after 40 hours a week at time and a half
• U.S. Department of Labor — Minimum Wages for Tipped Employees — Arkansas: $11.00 combined rate, $8.37 tip credit, $2.63 cash wage
• Arkansas Department of Labor and Licensing — Wage Claims — claims of $2,000 or less, for workers earning $50,000 a year or less; filed online through the Citizen's Portal
• Ark. Code § 11-4-405 — Payment on discharge — all wages due by the next regular payday; double wages if not paid within 7 days of it
• Ark. Code § 11-4-401 — Time of payment — corporations pay wages no less often than semimonthly; monthly allowed for some exempt managers and executives
• Arkansas Division of Workforce Services — Employer UI Contributions — employers pay unemployment insurance tax on the first $7,000 per employee per year