Little Rock, Arkansas by Sharon Hahn Darlin is licensed under CC BY 2.0

Arkansas Gov. Sarah Huckabee Sanders has signed a new round of tax cuts into law, angering critics who were hoping for a spending frenzy.

The legislation to cut taxes passed in the Arkansas House and Senate during special session on Tuesday, June 18, and got the governor’s signature on Wednesday. It cuts the state’s top individual tax rate from 4.4% to 3.9% and the top corporate rate from 4.8% to 4.3%. The change is effective immediately and applies retroactively beginning January 1 of this year.  

Alongside cuts to income tax, the state raised the homestead property tax credit from $425 to $500. During last year’s special session, the legislature increased the tax credit from $375 to $425.

According to a fiscal impact report by the state’s Department of Finance and Administration, the tax cuts will put a $483.5 million dent in state revenues during fiscal year 2025. Even so, the state is slated to end the year with a budget surplus, opening the door to more tax cuts in the near future.

This is already the third round of tax cuts since Sarah Huckabee Sanders moved into governor’s mansion just 15 months ago. With a Republican majority in the State Legislature, Sanders is in a good position to pass more cuts and fulfill her campaign trail promise to completely phase out state income tax.

Only seven states have zero income tax: Nevada, Wyoming, South Dakota, Tennessee, Florida, and Texas. These states serve as benchmarks for other states like Arkansas to learn from and follow. Texas in particular has become the envy of the union as a hub for people fleeing states like California that seek to tax their citizens out of existence. In 2023, one in five states passed income tax cuts, causing the left-wing Center on Budget and Policy Priorities to sound the alarm and warn of more to come.

Indeed, left-of-center think tanks and activists should be worried. Georgia, Idaho, Iowa, Louisiana, Hawaii and Kansas have all cut taxes in 2024. Arkansas is the seventh state to pass income tax cuts this year, and it may not be the last.

Americans for Tax Reform believes that eliminating state income tax makes states more attractive to business, reins in government spending and puts money back in taxpayers’ pockets, all of which will benefit Arkansas’s citizens as state Republicans continue to cut taxes.