January 20, 2026

Arkansas Tax Deductions to Know for 2026

Article Summary:

Learn which Arkansas tax deductions and credits may apply in 2026, including standard vs. itemized deductions, retirement exclusions, and property tax relief.

Legal Topics

2026 tax law, RMP Law, standard deductions, Tax Attorney, Tax Compliance, Tax Deductions, Tax Law,

EMPLOYMENT LAW UPDATE: FEDERAL TRADE COMMISSION ELIMINATES NON-COMPETE CLAUSES

On Tuesday, the Federal Trade Commission issued a new Rule putting an end to employment-related non-compete clauses. In its justification for the rule, the FTC called non-compete clauses “an unfair method of competition” and stated it is a “violation for [employers] to… enter into non-compete clauses (“non-competes”) with workers.” In today’s very competitive labor market, the new FTC Rule creates a significant disruption for employers.

WHEN IS THE FTC ELIMINATION OF NON-COMPETE CLAUSES SET TO TAKE EFFECT?

This new FTC provision—set to take effect in 120 days—renders existing non-compete agreements unenforceable. Existing non-compete agreements with senior executives will remain enforceable, although employers cannot require newly hired senior executives to sign such an agreement.

WHAT REQUIREMENTS HAS THE FTC IMPOSED ON EMPLOYERS BY ELIMINATING NON-COMPETE CLAUSES?

After the Rule takes effect, employers are required to deliver personal notice to employees (past and present) who signed a non-compete agreement informing them agreements are no longer enforceable. In the notice, employers must inform employees they are free to accept any job or start any business, even if it is directly competitive with the employer.

IS THE FTC’S ELIMINATION OF THE NON-COMPETE CLAUSES OPTIONAL FOR EMPLOYERS?

Compliance with the FTC Rule is not optional. Employers should consider new ways they can protect against a former employee gaining a competitive advantage by using the employer- provided training, the relationships made possible by the employer, or the confidential information learned from the employer. RMP can assist you in navigating this disruption and can provide advice on how to most effectively protect your vital business interests going forward.

Photo of the door to RMP Employment Law Attorneys Arkansas

RMP: Your Employment Law Attorneys

RMP Attorneys At Law has an experienced Employment Law Attorney team dedicated to helping you navigate these changes. If you have any questions or would like guidance, reach out to one of our employment attorneys, Tim Hutchinson, Seth Haines, Larry McCredy, or Taylor Baltz or call 479.443.2705.

Understanding Arkansas tax deductions can help taxpayers reduce their state tax liability and engage in effective tax planning to avoid surprises when tax season arrives. Because Arkansas tax laws do not always follow federal tax laws, it is especially important to understand which Arkansas income tax deductions and credits may apply for the 2026 tax year.

This guide outlines key Arkansas tax deductions for 2026 in clear, practical terms for individuals filing Arkansas income tax returns.

Tax professional wearing blue long sleeved shirt typing on a calculation assessing 2026 standard tax dedications.

Standard vs. Itemized Deductions in Arkansas

As is the case under Federal tax law, Arkansas taxpayers must choose between using a standard deduction and itemizing under Arkansas tax law.

Arkansas Standard Deduction

The Arkansas standard deduction is a fixed deduction set by state law and is indexed annually for inflation. Arkansas tax law does not automatically conform to federal tax law, meaning the Arkansas standard deduction is different from the federal standard deduction. The Instructions to Arkansas 2025 Individual Income Tax (including Form AR1000F) state that the standard deduction is $2,470 per taxpayer ($4,940 if married filing jointly) for the 2025 tax year. For married couples, both spouses must elect to use the standard deduction or itemize, regardless of whether the spouses file jointly or separately.

Arkansas House Bill 1066 proposed to increase the Arkansas standard deduction to $4,400 beginning in 2026, but it did not pass during the 2025 Regular Session of the Arkansas State Legislature. As a result, taxpayers should continue to rely on the standard deduction amounts published annually by the Arkansas Department of Finance and Administration (DFA).

🔗 Arkansas DFA – Individual Income Tax Instructions
2025_AR1000F_and_AR1000NR_Instructions.pdf

Itemized Deductions (Form AR3)

Taxpayers whose deductible expenses exceed the standard deduction may benefit from itemizing. Itemized deductions in Arkansas are claimed using Form AR3. Form AR3 and the Instructions to Arkansas 2025 Individual Income Tax (as referenced above) detail allowable deductions and documentation requirements.

🔗 Arkansas Form AR3 & Instructions
2025_AR3_BC.pdf

Common Arkansas Itemized Deductions

Medical and Dental Expenses

Arkansas tax law adopts Internal Revenue Code (IRC) Section 213, the federal tax law provision authorizing a deduction for certain medical and dental expenses, as such section was in effect on January 1, 2011. Accordingly, certain medical and dental expenses may be deductible if they exceed a required percentage of adjusted gross income (AGI). These may include unreimbursed medical care, prescriptions, and qualifying long-term care expenses.

🔗 IRS Publication 502 – Medical and Dental Expenses
https://www.irs.gov/publications/p502

Home Mortgage Interest

Arkansas tax law adopts IRC Section 163, the federal tax law provision authorizing a deduction for certain interest expenses, as such section was in effect on January 1, 2017. Accordingly, mortgage interest paid on a primary residence may be deductible in Arkansas, subject to certain limitations. Mortgage points may also qualify under certain circumstances.

🔗 IRS Publication 936 – Home Mortgage Interest Deduction
https://www.irs.gov/publications/p936

Taxes

Certain taxes, including property taxes paid on real and personal property not used for business purposes, may be deductible if you itemize. Arkansas income taxes themselves, among other types of taxes specifically listed in Arkansas Code Section 26-51-416, are not deductible on the Arkansas return.

Charitable Contributions

Arkansas tax law adopts, with some exception, IRC Section 170, the federal tax law provision authorizing a deduction for certain charitable contributions, as such section was in effect on January 1, 2019. Accordingly, charitable contribution deductions may be available for contributions or gifts to qualifying organizations. Cash and non-cash donations may qualify, but payments made for personal benefit—such as private school tuition—do not.

🔗 IRS Publication 526 – Charitable Contributions
https://www.irs.gov/publications/p526

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Education-Related Deductions

Arkansas allows a deduction for a portion of amounts paid by a taxpayer as tuition for the taxpayer himself, his spouse, or his dependent to attend a post-secondary education. This deduction has specific eligibility requirements and requires supporting documentation using Form AR1075

🔗 Arkansas DFA – Education Deductions (Form AR1075)
https://www.dfa.arkansas.gov/wp-content/uploads/2025_AR1075.pdf

Casualty and Theft Losses

Losses caused by events such as fires, storms, or theft may be deductible if eligibility requirements are met. Arkansas generally follows federal calculation methods but requires additional state forms.

🔗 IRS Publication 547 – Casualties, Disasters, and Thefts
https://www.irs.gov/publications/p547

Above-the-Line Deductions Available to Arkansas Taxpayers

Some Arkansas tax deductions apply even if you do not itemize. These above-the-line deductions reduce income before choosing between the standard or itemized deduction.

Common examples include:

Student loan interest deduction
Traditional IRA contributions
Teacher classroom expense deduction
Certain military-related expenses

🔗 Arkansas DFA – Adjustments to Income
https://www.dfa.arkansas.gov/office/individual-income-tax/🔗 IRS Publication 590-A – IRA Contributions
https://www.irs.gov/publications/p590a

Retirement Income and Senior Tax Deductions in Arkansas

Arkansas provides a retirement income exclusion allowing eligible taxpayers to exclude up to $6,000 of qualifying retirement income from state taxation. This exclusion often applies to pension and retirement plan distributions.

🔗 Arkansas Code § 26-51-307
https://law.justia.com/codes/arkansas/2023/title-26/subtitle-5/chapter-51/subchapter-3/section-26-51-307/

🔗 Arkansas DFA – Retirement Income Guidance
https://www.dfa.arkansas.gov/office/individual-income-tax/

Property Tax Relief: Arkansas Homestead Credit

While not an income tax deduction, the Arkansas homestead property tax credit is one of the most valuable tax benefits for homeowners.

Eligible Arkansas residents may receive a credit of up to $600 on property taxes for their primary residence. This credit is administered through county assessors.

🔗 Arkansas Assessment Coordination Division – Homestead Credit
https://www.dfa.arkansas.gov/office/assessment-coordination/property-tax-relief/

Federal Tax Law Changes That May Affect Arkansas Taxpayers

Although Arkansas has its own tax system, federal tax law changes for 2026 can affect planning decisions. Changes to the federal standard deduction, charitable rules, or retirement deductions may influence whether itemizing is beneficial.

🔗 IRS Inflation Adjustments
https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments

When to Talk to an Arkansas Tax Attorney

Tax deductions can be complex, and errors may result in audits or penalties. Consulting an RMP tax attorney can help ensure compliance while maximizing available deductions and credits.

RMP Law can assist with:

Tax planning for 2026 and beyond
Reviewing eligibility for Arkansas tax deductions and credits
Resolving tax audits or disputes
Advising families, retirees, homeowners, and small business owners

Contact RMP Law

Arkansas tax deductions are not always intuitive, and relying solely on federal tax assumptions can lead to errors or missed opportunities on an Arkansas return. From itemized deductions to retirement income exclusions, the details matter.

RMP Law helps Arkansas taxpayers understand and apply state tax rules with confidence. If you would like guidance on Arkansas deductions, credits, or tax planning for 2026, contact our office at 479-443-2705 or reach out through our website to schedule a consultation.