From the rivers to the mountain ranges, Arkansas State is a natural state full of diverse landscapes. This state offers plenty of floating, fishing, and other recreational fun.
This mid-America's most beautiful travel destination even has a much lower cost of living compared to the rest of the country. According to the report published by C2ER’s Cost of Living index, the residents of Arkansas have approximately 15% lower cost of living than the rest of the nation. This report was presented, with respect to the cost of housing, grocery, transportation, utilities, healthcare, etc.
To provide the best living standard to Arkansas's residents and to help them overcome their living expenses, the Arkansas State has increased the minimum wage to $9.25 that is $2.00 higher than the federal minimum wage rate of $7.25. This minimum wage is expected to increase to $11 in 2021.
So if you are nature lover, planning to settle and work in this beautiful natural state, and trying to deduce what you are going to earn working here, then you are suggested to use of Arkansas-AR Paycheck Calculator, to get accurate and instant results. Moreover, you must continue reading this guide to know how to calculate the take-home pay for working in Arkansas State.
The following are the steps that every employee and employee needs to consider to calculate paycheck for Hourly or fixed salary while working in Arkansas.
The first and foremost thing to calculate the paycheck is to determine the Pay Type. It is whether the employee is paid on:
Arkansas State and Federal Laws on Pay Type:
The second step is to determine the Pay Frequency of your Paycheck; it is how often the employees are paid. All States have their law for pay frequencies. Therefore, you must study the State Payroll law (discussed below in this step) before calculating the paycheck.
Some of the standard Pay Frequencies are:
Pay Frequency | Details |
---|---|
Weekly | The employees are paid once a week. |
Bi-Weekly | The employees are paid once every two weeks. |
Semi-Monthly | The employees are paid twice a month. Usually on the 15th and 30th day of the month. |
Monthly (Discouraged by Arizona State Law) | The employees are paid once every month. Mostly at the start or end of the month. |
Quarterly (Discouraged by Arizona State Law) | The employees are paid after every three months. |
Annually (Discouraged by Arizona State Law) | The employees are paid once a year. |
Arkansas State Laws for Pay Frequencies:
The third step is to determine the Gross Pay of the employee. Gross Pay is the amount of money an employee has earned in the last pay period. It consists of several components that are essential to consider to calculate Income Taxes, Deductions, and contributions. Below are the essential components to deduce gross pay:
Note: We provide multiple calculators to calculate Total Hours Worked and Overtime that you can use to calculate your Paycheck. They are as follow:
*Fringe Benefits:
Fringe benefits are the benefits offered by employers to employees who meet specific criteria set by the company. These benefits are often taxable and can affect the employee's paycheck.
The Fringe benefits are often deducted from employee’s Paycheck by Specific Dollar Amount or Percentage of the Gross Pay.
Some of the common Fringe Benefits are:
Arkansas State and Federal Laws on Gross Pay:
Here starts the complicated part. After the Gross Pay for the employee is deduced, the next thing an employer should do is refer to the W-4 tax form of an employee. This form is filled by the employee while joining the job.
Note:
The form W4 contains all the essential details, including income tax details, marital status, and the number of allowances to be claimed. These details are required to calculate the Taxable Income, Federal Taxes, Allowances, State Taxes, and Local Taxes, that the employer has to withhold from the employee's salary.
Note: As IRS has made changes in the Tax Form W4, which would be effective from January 2020. Therefore, all the following steps are according to the new form.
There is a total of four filing statuses, from which the employee has to choose one. These are the following:
Note: You can select "Single" as Marital Status on the Arkansas Paycheck Calculator if the employee is "Single" or "Married filing separately." Else Choose "Married" if the employee is "Married Filing Jointly" or "Head of Household."
Taxable income is the income, which is used to determine the amount of taxes that should be withheld from the employee’s paycheck by the employer. It is different from Gross Pay.
There is the portion of income that is exempted from the taxes, such as cash gifts, inheritances, rebates, Welfare income, child support, State and local tax refunds, Life insurance, etc. This portion can be determined and claimed by the taxpayer (employee) by using "itemized deductions."
As the "itemized deductions" process is too long, the Taxpayer can also go for “standard deductions (a specific amount defined by the government to be deducted from Gross Pay according to taxpayer’s filing status” instead, for calculating the Taxable Income.
Standard Deduction amount for 2018 to 2025 is as follow:
To determine the Taxable income, the taxpayer (employee) has to:
Filing Status | Standard Deduction Amount |
---|---|
Single | $12,000 |
Married Filing Separately | $12,000 |
Married Filing Jointly | $18,000 |
Head of Household | $24,000 |
Qualifying Widow(er)s | $24,000 |
Note: This is just a general overview of Taxable Income. Many other factors need to be considered for Taxable income determination. Moreover, the criteria can be different from person to person. You must refer to your Lawyer, or study Taxable income in detail for calculating the accurate Taxable Income.
As of now, the taxable income of an employee is deduced. The next step is to subtract any pre-tax contributions that were chosen by the employee. These contributions are designed to encourage employees to save for their retirement. Additionally, it further reduces the amount of taxable income, hence, increasing the take-home amount of an employee.
However, not all contributions are exempted from all taxes, but only from federal income tax. Therefore, some employees may have to pay FICA, state, or other taxes on such contributions.
Following are some of the common contributions that an employee can choose:
Before jumping on to Federal Taxes, it is essential to conclude the number of Allowances that an employee needs to claim.
Allowances are exemptions from paying a certain amount of income tax. Therefore, the amount of withholding tax that an employer withholds from the employee’s paycheck is inversely proportional to the number of allowances claimed.
|
|
---|---|
Situation | Number of Allowances to claim |
The taxpayer depends on someone | 0 to 1 Allowance |
Single – One Job – Taxpayer doesn't depend on anyone | 1 to 2 Allowances |
Married Couple with no dependents | 2 |
Head of Household with one dependent | 3 |
A married couple with one dependent | 3 |
A married couple with two dependent | 4 |
The employee in form W4 already fills details of claimed allowances. The employee must do a complete working before filling out the details for the number of allowances he/she needs to claim as claiming extra Allowances may cause underpayment of taxes that results in a penalty by the IRS. On the other hand, claiming fewer Allowances is like lending money to IRS without any benefit.
|
||
---|---|---|
Situation | Effects on Federal Withholding Taxes | Consequences |
To many Allowances claimed | ·Withholding Federal Tax decreases ·Take-Home Pay Increases ·The taxpayer may owe money to IRS | ·Tax Payer has to pay the pending tax amount along with penalties |
Too few Allowances claimed | ·Withholding Tax Federal increases ·Take-Home Pay decreases ·IRS may owe money to the taxpayer, for which | ·Tax Payer is likely to receive a refund ·Tax Payer may have less money to spend the whole year until the refund is received |
Details on how many allowances an employee must claim are provided here.
Once the final taxable income is calculated after subtracting all deductions (standard or itemized) and contributions, a certain amount is withheld by the employer from an employee's paycheck as federal income tax along with the two federal (FICA) programs: Social Security and Medicare.
This Federal Income Tax rate is applied at a gradual level, ranging from 0% to 37% of taxable earnings. The Tax rate depends on the filing status, number of Allowances claimed, and taxable income.
Therefore higher the income, the higher the federal tax rate, and the higher the number of Allowances claimed, the higher the Net Pay (Take-home Pay).
These rates are as follow:
Taxable Income | Rate |
---|---|
$0 - $9,700 | 10% |
$9,700 - $39,475 | 12% |
$39,475 - $84,200 | 22% |
$84,200 - $160,725 | 24% |
$160,725 - $204,100 | 32% |
$204,100 - $510,300 | 35% |
$510,300+ | 37% |
Taxable Income | Rate |
---|---|
$0 - $19,400 | 10% |
$19,400 - $78,950 | 12% |
$78,950 - $168,400 | 22% |
$168,400 - $321,450 | 24% |
$321,450 - $408,200 | 32% |
$408,200 - $612,350 | 35% |
$612,350+ | 37% |
Taxable Income | Rate |
---|---|
$0 - $9,700 | 10% |
$9,700 - $39,475 | 12% |
$39,475 - $84,200 | 22% |
$84,200 - $160,725 | 24% |
$160,725 - $204,100 | 32% |
$204,100 - $306,175 | 35% |
$306,175+ | 37% |
Taxable Income | Rate |
---|---|
$0 - $13,850 | 10% |
$13,850 - $52,850 | 12% |
$52,850 - $84,200 | 22% |
$84,200 - $160,700 | 24% |
$160,700 - $204,100 | 32% |
$204,100 - $510,300 | 35% |
$510,300+ | 37% |
In addition to the Federal Income Tax, Employers are also abided to withhold an amount from the employee’s paycheck for FICA Tax (Federal Insurance Contributions Act). These taxes are used to help American citizens with retirement, disability, survivorship, and medical treatment.
FICA Tax comprises of:
A total of 12.4% of FICA tax is paid for Social Security, by both employee and employer. Here 6.2% is paid by the employee and remain 6.2% is funded by the employer. However, the Social Security tax is only applicable to the first $132,900 (in 2019) earned. No amount is charged above this earning,
1.45 percent each is paid to Medicare by both employee and employer. Moreover, if the taxpayer (employee or employer) earns more than $200,000 as a single filer or $250,000 as a married couple than additional Medicare taxes of 0.9% are to be paid.
Note: If you are calculating your federal taxes as an employer, you have to add FUTA unemployment taxes in addition to FICA taxes, which is 6% of the first $7,000 of each employee’s taxable income. Moreover, you can also claim a tax credit of up to 5.4% for state unemployment tax you pay, only if you pay on time and in full.
Some points related to Federal Withholdings Taxes for Arkansas State:
Now, as you are done with Federal Payroll Taxes, the next thing that you need to calculate is Arkansas State Taxes. This State charges the progressive Income tax to its residents in seven tax brackets, each depending on the gross income. The tax range for 2019 is 0.9% - 6.9%, where the tax rate increases with higher pay.
The employers need to calculate the employee’s Arkansas state tax withholdings based on information provided in Form AR4EC. This form is filled and submitted by the employee at the time of joining the job. However, it should be updated when any significant changes occur in life on an employee, such as marriage, childbirth, or divorce.
In Arkansas, the State Income Tax rates are as below:
Arkansas Taxable Income | Rate |
---|---|
$0 - $4,399 | 0.9% |
$4,400 - $8,699 | 2.4% |
$8,700 - $13,099 | 3.4% |
$13,100 - $21,699 | 4.4% |
$21,700 - $36,299 | 5.0% |
$36,300 - $77,400 | 6.0% |
$77,401+ | 6.9% |
Like, Federal Tax allowances, the Arkansas employee can also claim Arkansas State Allowances, according to the filing status. A taxpayer can avail deductions from any one of the two methods; Standard or Itemized Deductions, depending on which way would give them maximum relief from the state income tax. However, if a married couple is filing separately, and one is using itemized deductions, then the state requires the other to do the same.
|
|
---|---|
Filing Status | Exemption Amount |
Single | $2200 |
Married Filing Separately (Same Return) | $2200 |
Married Filing Separately (Different Return) | $2200 |
Married Filing Jointly | $4400 |
Head of Family | $2200 |
Qualifying Widow(er) | $2200 |
Note: Itemized deduction is a detailed topic, for which you can refer to the Arkansas State Tax official website for further Assistance.
Arkansas State also offers special discounts / Tax credits/deductions to the eligible individuals. The eligibility criteria depend on the filing status and other conditions.
Make sure to refer to the official site of Arkansas State, to read the eligibility criteria. Maybe you are lucky enough to reduce your State payroll taxes further.
Arkansas Laws on State Income Tax:
Although employees are not charged any post-tax deductions. However, they can choose some post-tax contributions and benefits. If an employee has opted some, then its employer's duty to account them into the employee's paycheck.
Some of the common Post-Tax Contributions are:
Once you have calculated all the details, as discussed above, then it's time to enter all your details into our Arkansas Paycheck Calculator and deduce the paycheck “Net Pay” amount instantly.
Answer: Arkansas Payroll income tax rates range from 0.9% - 6.9%, which is divided into seven tax brackets, which are totally dependent on the income. Therefore, the higher the income, the higher the payroll tax rate you will be charged, regardless of your filing status.
Answer: Arkansas (AR) withholding is an amount withheld for the Arkansas State, from the income of Arkansas Residents. This amount is determined through the seven tax brackets that range from 0.9% - 6.9%, provided by the Department of Finance and Administration of Arkansas. However, there is no local income tax charged by any city in Arkansas.
Answer: Yes, Arkansas has a state income tax, but no local income tax.
Answer: Following are the filing status, along with the gross income, on which Arkansas Residents are eligible to file taxes:
Answer: The average or median household annual income of Arkansas Residents is $43,813, according to the U.S. Census Bureau, which is less than the median household yearly income of $60,336 across the entire United States.