(The Center Square) – The 2024 State Business Tax Climate Index from the Tax Foundation ranks Arkansas at 38th.
The nonpartisan tax policy group report ranks states for its annual index based on corporate taxes, income taxes, sales taxes, property taxes and unemployment insurance taxes.
Arkansas ranked in the bottom 10 for its sales tax, at 44th, with an average state and local sales rate of 9.44%.
The state fared better with property and unemployment insurance taxes, ranking 24th for both.
Arkansas’ corporate tax rate was the 27th in the nation, according to the report, and its income tax rate was at 37.
Gov. Sarah Huckabee Sanders and lawmakers enacted new income and corporate tax breaks in a special legislative session held last month.
Single taxpayers will receive a $150 one-time tax credit for individuals and $300 for married couples.
The tax cuts will return $250 million to taxpayers in income taxes and $58 million to corporations, Sanders said during the bill signing.
Lawmakers passed a bill during the 2023 regular session that phases out the state’s throwback rule by 2030.
“Currently, manufacturers based here have to pay a tax when selling things outside of Arkansas, hurting their ability to compete in the market,” Sanders said. “We’ll get rid of this tax and boost businesses, jobs and investment in our state.”
Eliminating the rule should help the state in the future with its corporate tax score, according to the Tax Foundation.
Businesses look at a state’s tax structure when deciding where they will locate, according to the report.
“Business taxes affect business decisions, job creation and retention, plant location, competitiveness, the transparency of the tax system, and the long-term health of a state’s economy,” the report said.
