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Arkansas is aggressively reducing its income tax rate (4.4% top rate in 2024; targeting 4.0% or lower). Combined with a right-to-work environment and no state PFL, Arkansas is one of the most employer-friendly payroll states in the South. Rippling handles AR DFA, ADWS, and workers’ comp compliance.
Arkansas is a South-Central economy with strengths in retail (Walmart HQ in Bentonville), logistics, food and agriculture, manufacturing, and financial services. Arkansas payroll is employer-friendly: a progressively reducing top income tax rate (4.4% in 2024, targeting further reductions), no state-mandated paid family leave, right-to-work, and low SUTA rates. The Bentonville-Fayetteville corridor has emerged as a significant technology and supply chain innovation hub anchored by Walmart and its supplier ecosystem.
Rippling’s Arkansas payroll module provides:
| Contribution | Rate | Notes |
|---|---|---|
| FUTA | 6.0% (net 0.6%) | After SUTA credit; first $7,000 |
| AR SUI (ADWS) | New employer 2.9% | On first $7,000 of wages (2024) — very low wage base |
| Social Security | 6.2% | Up to $168,600 (2024) |
| Medicare | 1.45% | No wage base limit |
| Workers’ Compensation | Varies by risk class | Required for 3+ employees |
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| Contribution | Rate | Notes |
|---|---|---|
| Federal Income Tax | Graduated 10–37% | Per W-4 |
| Social Security | 6.2% | Up to $168,600 (2024) |
| Medicare | 1.45% + 0.9% surtax | Surtax above $200K single |
| Arkansas State Income Tax | 2%–4.4% | Progressive; top rate 4.4% (2024); targeting 4.0% or lower with further reductions |
| Arkansas Income | AR Rate |
|---|---|
| Up to $4,999 | 2% |
| $5,000–$9,999 | 4% |
| Above $9,999 | 4.4% (2024) |
AR withholding remitted to AR DFA. Annual AR-3 reconciliation. Top rate 4.4% (reduced from 5.9% as recently as 2022; continuing to decrease).
Final Pay: Arkansas requires final pay on the next regularly scheduled payday. Accrued vacation: Arkansas treats promised vacation as wages if the employer’s policy provides for payout. A written forfeiture policy clearly communicated before employment is generally enforceable.
Arkansas has aggressively reduced its top income tax rate from 5.9% (2022) to 4.9% (2023) to 4.4% (2024), with plans to continue reducing toward 4.0% or lower. This makes Arkansas one of the fastest-moving state tax reduction stories in the US. Rippling updates Arkansas withholding annually as rate changes take effect.
Bentonville is the global headquarters of Walmart, the world’s largest private employer. The Walmart supplier ecosystem has drawn thousands of consumer goods, logistics, and technology companies to the Bentonville-Fayetteville corridor. The tech and supply chain innovation hub that has emerged around Walmart HQ benchmarks salaries to national market rates, making it distinctly different from general Arkansas compensation norms.
Arkansas requires workers’ compensation coverage for employers with 3 or more employees (agricultural: 5+; domestic workers: varies). Coverage through private insurers or the assigned risk pool. The Arkansas Workers’ Compensation Commission administers claims. Arkansas’ workers’ comp system has been reformed in recent years to reduce employer costs.
Arkansas’ minimum wage is $11.00/hour (January 2024), above the federal minimum of $7.25/hour. Arkansas voters approved minimum wage increases by ballot measure. No cities have enacted local minimums above the state floor.
