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

Arkansas lawmakers are committed to making Arkansas a pro-growth, taxpayer friendly state. Governor Sarah Huckabee Sanders has pledged to eliminate the state income tax, a goal that is shared by many in the legislature. This would be a huge win for all Arkansans.

Currently, there are eight states – including Arkansas’s neighbors Tennessee and Texas as well as nearby Florida – that do not impose individual income taxes of any kind. New Hampshire, which does not tax wage income, will be the ninth “no income tax” state as soon as it completes a phase out of its interest and dividends tax.

As people and jobs continue to move out of high tax states and into states that impose low- and no-income taxes, a growing movement of states – including Arkansas’s neighbors Louisiana, Mississippi, and Oklahoma as well as nearby Kentucky – are actively working to be the tenth state added to the “no income tax” list.

In addition to allowing individual taxpayers, families, and small businesses across Arkansas to keep more of their hard-earned money, phasing out the state income tax would allow Arkansas to compete in the economy of tomorrow. While this would be a huge victory on its own, lawmakers are not stopping there. They are thinking even further ahead.

Under current law in Arkansas, local governments are allowed to impose their own local income taxes. While there are currently no such taxes in place, state lawmakers are rightfully concerned that some local officials may see the phase out of the state income tax as an opportunity to sneak in local income taxes.

In addition to robbing taxpayers of the much-needed relief that Governor Sanders and many in the state legislature are working to deliver, local income taxes would also undermine what many hope will soon be Arkansas’s reputation as low, then no income tax state.

Fortunately for the hardworking people of Arkansas, Representative David Ray’s House Bill 1026, which has been approved by the legislature and will soon be enacted by the Governor, gets out in front of this problem.

HB 1026, once implemented, will ban local governments from ever being able to impose income taxes and make it so all local taxes to be approved by taxpayers in a special or general election.

“The hardworking taxpayers I represent are sick of being nickeled and dimed to death by a million different taxes,” explained Rep. Ray. “This bill was a commonsense measure to stop a bad idea before it takes hold in Arkansas. As we work to phase out our state income tax, the last thing we need are cities and other local governments backfilling their citizens’ tax burden on the local level.” 

HB 1026 is a huge win for all Arkansas. This safeguard will protect all taxpayers from local tax increases and will also ensure local governments do not undermine any pro-growth income tax relief delivered by state lawmakers.