Corporate Charter and Franchise Tax
The Arkansas franchise tax is imposed upon domestic corporations for the grant of charter privileges and upon foreign corporations for the privilege of doing business in the state.
Domestic for-profit corporations pay a charter fee and initial franchise tax upon filing articles of incorporation. The charter fee is $50. The franchise tax is twenty-seven one-hundredths of one percent (0.27%) of that portion of the par value of the outstanding capital stock that represents the real and personal property of the corporation. Corporations with no authorized capital stock pay an annual tax of $100 regardless of valuation. No corporation shall pay less than $50 or more than $1,075,000. After the initial payment, the franchise tax is due May 1 of each year.
Corporate Income Tax
All corporations doing business in the state, whether foreign or domestic, are subject to tax on net income. The rates are as follows:
|Income Level||Tax Rate|
|In Excess of $100,000||2%|
The state of Arkansas does not have a property tax; however, Arkansas cities and counties do collect a property tax, which is the principle source of revenue for funding local public schools.
The tax is calculated based on 20 percent of the fair market value of real and personal property and the average annual value of merchants’ stocks and/or manufacturers’ inventories based on millage rates in individual school districts. Business firms and individuals are subject to annual property tax on all real and personal property.
Property Tax Millage in Pope and Yell County Communities:
Example: $100,000 value X 20% = $20,000 value X .04645 mils = $929.00
Freeport Law – Arkansas has a Freeport Law that exempts from property tax those finished goods and raw materials in transit or awaiting shipment to out-of-state customers.
Payment in Lieu of Taxes
Real and personal property financed by revenue bonds and general obligation bonds may be exempt from property taxes during the lease-amortization period in which a local government retains title to the property. Payments by businesses to local governments in lieu of property taxes are generally encouraged and negotiated between the parties involved.
The negotiated payment in lieu of property taxes shall not be less than 35 percent of the property taxes that would have been paid if the property were on the tax bills.
Unemployment Insurance Tax
Every business in Arkansas pays an unemployment insurance tax. A business with no previous employment record in Arkansas is taxed at 3.3 percent on the first $9,000 of each employee’s earnings until an employment record is established, usually within three to five years. The rate generally decreases to an average of 2.0 percent after an employment history is established.
Each firm’s employment record is determined primarily by its taxable payroll and history of employee involuntary termination. The tax is determined by past experience and the amount of the reserve ratio. The reserve ratio is the excess of contributions paid over benefits charged as related to payroll. The higher the reserve ratio, the lower the tax rate. Currently, the minimum rate is 0.5 percent and the maximum is 6.4 percent.
Arkansas has a state sales tax of 6.5%.
|Municipality||Additional Tax||Total Tax (Including State, County, & City)|
Source: Arkansas Department of Finance
Did you know Russellville offers business assistance programs? Learn more about how we can help make your business a success.
The people and opportunities in this community are what drew me to Russellville, and that is what continues to keep me here.Megan Ayres-Moore, Park Interpreter, Lake Dardanelle State Park
708 West Main Street, Russellville, AR 72801
Russellville is a great place to visit and call home!
Live, Work & Play
Do you love the idea of walking down the main street in the morning, grabbing a cup of coffee at your local coffee shop and heading off to work only to finish your day in your kayak, taking a quick hike or bike ride? If so, Russellville is the place for you. With our increasing number of urban shops and living area, our growing cultural atmosphere, amazing schools and an increasing number of job opportunities, Russellville has something for everyone.