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Arkansas Exempt Income

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Arkansas Exempt Income


Military Retirement Exemption (Act 141 of 2017): Beginning with tax year 2018, retirement benefits received by a member of the uniformed services as defined in this Act are exempted from the income tax.

Military Pay
If you have U.S. Military Compensation Pay, enter gross income in the space provided. You (and your spouse, if applicable) are entitled to a $6,000 exemption from the gross income. The balance is taxable. If you have U.S. Military Enlisted Compensation Pay, you are entitled to a $9,000 exemption from the gross income.

Beginning with tax year 2014, all of the service pay or allowance received by an active duty member of the armed services is exempt from Arkansas income tax. If you had U.S. active duty military compensation, enter gross amount in the space provided. Do not enter an amount in Column A. Attach W-2(s). 

If you are a duly ordained or licensed minister receiving a housing allowance from your church and you do not file a Schedule C or C-EZ, complete this line by entering your gross compensation from the ministry less rental value of a home. The balance is subject to tax.

You are eligible for the $6,000 exemption for retirement or disability benefits provided the distribution is from public or private employment related retirement systems, plans or programs. (The recipient need not be retired.) The method of funding is irrelevant. The exemption may be from either lump-sum or installment payments. The early withdrawal penalty may be applicable even though the exemption is granted.

If you received an IRA distribution after reaching the age of fifty-nine and one-half (59 1/2), the first $6,000 is exempt from tax. Premature distributions made on account of the participants death or disability also qualify for the exemption. All other premature distributions or early withdrawals including, but not limited to, those taken for medical-related expenses, higher education expenses, or a first-time home purchase do not qualify for the exemption.

Pension Plan
If you have income from an Employment Related Pension Plan or a qualified IRA distribution, enter gross amount from box 1 of your 1099R(s) in the space provided. Enter the federal taxable amount from box 2a of your 1099R(s) in the space provided. If Box 2b on the 1099R(s) is checked and/or box 2a is blank, then use the Simplified Method Worksheet provided in the Form 1040 Instruction booklet to calculate the taxable amount of your distribution. You are entitled to a $6,000 exemption from the federal taxable amount, the balance is taxable to Arkansas. Enter the balance below.

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Article Details
Views: 1830 Created on: Jun 15, 2013
Date updated: Dec 31, 2018
Posted in: States, Arkansas

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