A Complete Guide to Arkansas Payroll Taxes

A Complete Guide to Arkansas Payroll Taxes

Deskera Content Team
Deskera Content Team
Table of Contents
Table of Contents

Did you know that over a quarter of the world's workforce has experienced a payroll error in their career? This could be due to a calculation error, a human oversight, or a technical glitch. It would prove to be a costly mistake if the payroll professionals did not pay closer attention to the process. However, entering numbers is not the only job that a payroll specialist is required to do. An HR professional who does this job also needs to be aware of the local employment laws, taxes, company policies, and so on while working on payroll.

Many small business owners are confused about payroll taxes and how to handle them. Payroll taxes in Arkansas are not very complicated, but they are a pain to deal with. This is why we put together this complete guide to Arkansas payroll taxes. This will help you understand the basics of your payroll taxes and include links to all the relevant forms. This blog will take you through these payroll taxes and what you need to know when operating in the state of Arkansas.

Table Of Contents

  1. What Are the Payroll Taxes in Arkansas?
  2. Arkansas Payroll Laws, Taxes, and Regulations
  3. Arkansas Payroll Taxes
  4. Arkansas Payroll Regulations
  5. What Is Arkansas State Withholding Tax?
  6. How Is Arkansas State Withholding Tax Calculated?
  7. How To Do Payroll in Arkansas?
  8. Arkansas HR Laws That Affect Payroll
  9. Arkansas Wage and Hour Laws​​
  10. Arkansas State Disability Insurance
  11. Unemployment Insurance Tax
  12. What's the Difference Between Arkansas Unemployment Taxes and Arkansas Disability Insurance?
  13. Arkansas Payroll Tax Resources
  14. Conclusion
  15. Key Takeaways

What Are the Payroll Taxes in Arkansas?

If you are a small business owner, you probably have to pay your employees. As a small business owner, you may have to pay your employees biweekly or monthly and withhold income taxes, Social Security tax, Medicare taxes, and federal unemployment taxes. These taxes are collectively known as payroll taxes. Here is an explanation of what each of these is, as well as the income tax, along with the payroll taxes in Arkansas.

If you have never filed tax forms before, you might be confused about the payroll taxes in Arkansas. Arkansas has four different types of income tax: personal income tax, corporate income tax, bank and savings, loan income tax, and trust income tax. To determine how much you are paying in taxes, you need to add the county, city, and school district taxes.

On top of all this, you need to pay the employee portion. In addition to your personal income tax, you will pay a 1.0 percent employee withholding tax and an additional 0.9 percent employee withholding tax on your wages.

Arkansas Payroll Laws, Taxes, and Regulations

Arkansas payroll laws include the minimum wage, overtime pay, and other guidelines for employers. An employer can deduct from an employee's salary for room and board as well as for inventory shortages. An employer cannot fire an employee for jury duty, attending court, or serving as a witness for the state.

Arkansas Payroll Taxes

The payroll taxes in Arkansas, which are also referred to as employee withholdings, are the taxes that employers must pay when employees are hired. The state of Arkansas taxes its residents, excluding those who are over the age of 65 or are disabled in some way, at a rate of 3%. This tax is paid every year, regardless of whether or not the resident works during that time.

In addition to having a state tax, employers in Arkansas must also pay the Federal Insurance Contribution Act, also known as FICA. This rate is 6.2% and includes the Social Security tax of the same percentage, which is given to the Social Security Administration, and the Medicare tax of 1.45%.

Arkansas Payroll Regulations

Many small business owners and managers find themselves unsure of what they need to do regarding pay rates, taxes, and other requirements. The Arkansas Department of Labor (ADOL) is responsible for many different laws and regulations regarding payroll in the state of Arkansas. The ADOL has made it easy for all to understand their particular state laws and can provide assistance for small businesses and employers alike.

Payroll regulations vary across states and sectors. A payroll system is only as good as the set-up, and the set-up is usually more complex than it seems. Here are the regulations for payroll systems in the state of Arkansas. Federal overtime laws ensure that salaried workers are paid for any hours worked over 40 hours per week.

Hourly workers who work beyond forty hours must be paid time and a half for any hours worked over forty hours. Any non-exempt employees who work seven days in a workweek must be paid at least time and a half for any hours worked over forty. Employers who fail to comply with federal and state laws can face steep fines, and the Arkansas Lawyer Referral Network can help you find a good attorney.

What Is Arkansas State Withholding Tax?

There are many states in the US that require employers to withhold state tax from their employees. All states have their own tax rules and regulations that can get a little complicated. However, there is a way for an employer to pay state tax on behalf of their employees.

Arkansas state withholding tax is a percentage of earnings withheld by your employer and given to the state. The percentage withheld is dependent on the amount you earned in a paycheck. The withholding rate is recalculated every year based on an average of the Consumer Price Index. This has been effective since 1983. Employers are still required to withhold the same amount even if you bring less than the average.

How Is Arkansas State Withholding Tax Calculated?

Arkansas State is one of the 47 states that use the same tax withholding standard as the federal government. The only difference is that they have an extra allowance that you do not have to worry about. Here is how Arkansas State calculates withholding tax:

Number of allowances x 2 = Total tax amount

Number of allowances x 1 = Excess amount

You use the excess amount when figuring out how much money you will owe in taxes when you file your tax return. So for the Arkansas State tax withholding, the number of allowances is the number of people claimed on the W-4.

How To Do Payroll in Arkansas?

Payroll is the process of making sure employees are paid in a timely manner. A lot of businesses have a Payroll Specialist to do the work for them, but for smaller businesses, it's important to understand the process of payroll and how to do it well. There are several different ways to go about doing payroll, and it's important for you to find the one that works for your company. What you will find is that completing payroll is regulated by the state in which you are doing business. Here are some of the steps you will need to take to do payroll in Arkansas.

Payroll is something that can be a bit confusing. Thankfully, you will not have to worry about it if you are a small business owner. When you start your business and hire employees, you will be required to withhold income tax, social security, and Medicare tax from each paycheck and send the money to the IRS and Social Security Administration. The IRS will send you a federal tax form. You will need to do the following:

-File copies of employees' individual tax returns (Forms W-2) with the Social Security Administration.

-File a copy of the information return with the IRS.

-Send copies of the W-2s to the Social Security Administration.

Arkansas HR Laws That Affect Payroll

There are numerous Arkansas HR Laws that affect payroll. While many employers are familiar with the federal pay scale, there are additional state laws that dictate how an employee should be paid. For example, the Arkansas Minimum Wage Act of 2015 requires businesses to pay the state, federal, and Arkansas minimum wage.

There are additional requirements, so it's best to contact a specialist before your next move. You don't want to end up with a huge tax burden or out of a job if you try to save some money. Contact a specialist from SBS today to learn more about the Arkansas Minimum Wage Act of 2015.

Arkansas Wage and Hour Laws​​

Arkansas Wage and Hour Laws​ have been in place since 1966. The Fair Labor Standards Act dictates the rules for the labor standards of employees and employers. The minimum wage varies depending on the state you live in and whether you are exempt or non-exempt. Arkansas wage and hour laws say that employees are entitled to a wage rate that is not less than $7.25 per hour.

However, if they are not able to be classified as an exempt employee, they must be paid overtime. This means you must pay them 1.5 times their standard rate for any work that exceeds 40 hours in a week. You cannot fire or punish an employee for inquiring about or discussing their pay. ​

Arkansas State Disability Insurance

Arkansas State Disability Insurance is a good option for those who need a little help. The state of Arkansas provides disability insurance for those who are unable to work due to a disability. However, there are certain criteria for being eligible for disability insurance.

The employee must be a resident of Arkansas, be a citizen of the United States, and have worked long enough to qualify for the program. As long as you meet these conditions, you can apply through the state of Arkansas if you need this program.

If you are an employee, here is how you can get the benefits of the disability insurance. If you work in Arkansas, you are entitled to get benefits under their state disability insurance policy. You can buy this coverage through your employer or your state. If you work for a company with more than 14 employees in Arkansas, then it's likely that you are already paying into this policy.

If you have a disability or a family member with a disability, you can apply to the state to get benefits under this policy. Here's what you need to do: First, visit the Arkansas website for more information on the level of coverage you qualify for. Then, the state will contact you to complete the paperwork for the benefits application. Finally, if you are approved for benefits, you will be paid by the state under their disability insurance policy.

Unemployment Insurance Tax

One of the taxes that employers pay in Arkansas is the unemployment insurance tax, which is also commonly called the payroll tax. Arkansas employers must pay the unemployment insurance tax for each employee.

The unemployment insurance tax is not considered a tax that companies pay on profits. Rather, it is a tax on the compensation of employees. The unemployment insurance tax is calculated for each employee as 6.4 percent of the employee's taxable wages, up to a maximum amount of $14,000.

What's the Difference Between Arkansas Unemployment Taxes and Arkansas Disability Insurance?

For most people, there is no difference. If you work in Arkansas and your employer doesn't provide you with disability insurance, you are required by law to pay into the state's disability insurance fund. If you are disabled, you are given disability payments that are tax-free up to the federal poverty line. If you are not disabled, you are taxed at a similar rate as you are on your income.

If you are looking for disability insurance that is a good deal, you could consider shopping around. Arkansas Disability Insurance is available from multiple providers, some of which are more affordable than others. Be sure to compare rates with an Arkansas disability insurance provider, and remember that going with a provider that is closer to home will save you money on gas!

Arkansas Payroll Tax Resources

Payroll taxes are a form of income tax that is withheld from an employee's earnings and is paid over to the Arkansas Department of Finance and Administration. The agency administers payroll tax funds for the benefit of state and local governments.

A business is required to register with the Arkansas Tax Commission and the Department of Finance and Administration if it has an annual payroll of $2,000 or more. Small businesses or self-employed individuals may be exempt from paying some payroll taxes. The rules are complex, and businesses are advised to seek out a tax specialist or prepare their own payroll taxes.


Arkansas payroll taxes are a headache for many businesses. Many business owners don't realize that not all payroll taxes are paid to the state. If a business is based outside of Arkansas but has employees based in Arkansas, then it must pay all applicable payroll taxes to the state.

This article was written to make your life easier by outlining everything you need to know about the payroll tax rules in the state of Arkansas. We hope you find the information useful! If you have any comments or questions, please leave them in a comment below. We always love to hear from you!

We all face taxes in our daily lives, and sometimes we feel that we are not getting a fair price for the things we purchase. Understanding Arkansas payroll taxes can be a difficult task. Payroll taxes are a set of taxes collected by the government for the purpose of funding federal benefit programs. In order to find out if you have to pay any Arkansas payroll taxes and what you have to pay, you should gather some information first and take a look at an information sheet. The Arkansas payroll taxes you will have to pay to depend on the amount you are paid.

How Deskera Can Assist You?

As a business, you must be diligent with the employee payroll system. Deskera People allows you to conveniently manage payroll, leave, attendance, and other expenses. Generating payslips for your employees is now easy as the platform also digitizes and automates HR processes.‌‌‌‌‌‌‌‌

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Key Takeaways

  • The payroll process is different from one state to another
  • Understanding the local employment laws is important
  • The disability insurance and unemployment taxes impact payroll calculation in Arkansas
  • Wage hours and withholding taxes need to be taken into account while calculating and processing payroll
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