Moving to Arkansas

Arkansas taxes residents on everything, nonresidents on what they earn in Arkansas, and in the year you move you are both. A resident is anyone domiciled in Arkansas, or anyone who keeps a permanent place of abode here and spends more than six months of the year in the state in total; exactly six months is not enough. The move-year return is Form AR1000NR, and it works differently from most part-year returns: it computes Arkansas tax on your income from all sources for the whole year, as if you had lived here all along, and then multiplies that tax by the share of your income that was Arkansas-source or received while you were a resident. Arkansas has no reciprocal agreement with any state. A resident who pays income tax to another state takes a credit on Form AR1000TC for the lesser of that tax or the Arkansas tax on the same income, with a signed copy of the other return attached; a nonresident cannot take the credit. The one cross-border exception is Texarkana, where a resident of the Arkansas side owes no Arkansas tax at all and a resident of the Texas side owes none on income earned inside the Arkansas city limits. Remote work is taxed where it is physically done, in both directions. And once you leave, no state may tax the pension or IRA income you earned there; it belongs to the state you live in when the check arrives.

Who is a resident

The Department’s residency rule has two prongs. The first is domicile: the place you intend as your permanent home and intend to return to whenever you are away. Domicile takes an act and an intent together; it begins when you are physically here with that state of mind, and it lasts until you establish a new one somewhere else. A temporary stay elsewhere, for a job assignment, school or a winter, does not end it. Everyone has exactly one domicile.

The second prong catches people whose domicile is elsewhere. If you maintain a permanent place of abode in Arkansas, a home with some degree of permanence rather than a hotel or a short-term rental, and you spend in the aggregate more than six months of the year in Arkansas, you are a resident for that year regardless of where your domicile is. The rule is explicit that a person who spends less than six months, or exactly six months, is not caught by this prong. Where neither prong is clear, the Department looks at the address on your federal return, where your spouse and children live, how long you and they have been in Arkansas, and the absence of ties to other states.

The AR1000F instructions put it in filing terms: a full-year resident is someone who lived in Arkansas all year or kept an Arkansas domicile or home of record; a part-year resident is someone who established an Arkansas domicile or moved out during the year; a nonresident is someone who never made Arkansas a domicile. Part-year residents and nonresidents with any Arkansas income file Form AR1000NR, with no minimum.

The part-year return: Form AR1000NR

The AR1000NR has three columns. Columns A and B report all income from all sources for the entire year, for the taxpayer and spouse. Column C reports the Arkansas part: income from Arkansas sources at any time during the year, plus income of any kind received while you were an Arkansas resident. Wages are Arkansas-source when the work was done in Arkansas; a bonus paid in Arkansas for work done elsewhere before the move is not. Interest, dividends, pension and IRA payments follow your residence on the day they were received. Rent from Arkansas property and gain on Arkansas real estate are Arkansas-source whenever they arise. Business income is sourced where the business is done.

The tax is then computed on the column A and B totals, after the standard deduction or Form AR3 and the $29 credits, exactly as a full-year resident would compute it. Lines 38A through 38D do the proration: line 38A is column C Arkansas AGI, line 38B is total AGI, line 38C is the ratio to six decimal places (capped at 100%), and line 38D multiplies the net tax by that ratio. The result is the Arkansas tax. Pages 1 and 2 of the federal return are attached.

Two consequences follow from prorating the tax rather than the income. The deduction and the credits are never prorated; they are taken in full against total income and then the proportion is applied. And a mover with large income in the other half of the year pays Arkansas at a higher average rate than a full-year resident with the same Arkansas income would, because the low brackets are spread across the whole year’s income. The effect is small but real.

No reciprocity, one credit

Arkansas has no reciprocal agreement with any state. An Arkansas resident who works across the line files a nonresident return in that state, if it has an income tax, and reports the same wages on the AR1000F. The relief is the credit for taxes paid to another state on Form AR1000TC, line 2: the lesser of the tax actually paid to the other state or the Arkansas tax on that income, figured by computing Arkansas tax with and without the other-state income and taking the difference. A signed copy of the other state’s return must be attached; the other state’s withholding is never entered as Arkansas withholding. The credit is for residents. A nonresident who works in Arkansas takes the corresponding credit at home, and a part-year resident takes the Arkansas credit only for the period of Arkansas residence. The credit is also available for a resident shareholder’s share of income tax an S corporation paid to a state that does not recognize S status. A gambling tax that is not an income tax does not count.

Where the other state’s tax on the wages is at least the Arkansas tax, the credit wipes out the Arkansas tax on them. Where it is lower, Arkansas collects the difference. Where the other state has no income tax, there is nothing to credit and Arkansas taxes the wages in full; the employer there will not withhold Arkansas tax unless asked, so estimated payments are usually needed.

Texarkana

The state line runs down State Line Avenue, and Arkansas has carved out the city on both sides. A resident of Texarkana, Arkansas is exempt from Arkansas income tax on all income earned while living inside the city limits. A resident of Texarkana, Texas is exempt on income earned inside the Texarkana, Arkansas city limits, and taxed on any other Arkansas income. The exemption is claimed on Form AR1000ADJ as the border-city exemption, with Form AR-TX from the employer for wage income; nonwage income needs no AR-TX. The return must show a street address in one of the two Texarkanas, and the instructions are blunt: use a post office box and the exemption will not be allowed. Someone who moves into or out of Texarkana, Arkansas during the year claims the exemption only for the period of residence there.

Remote work across the line

Arkansas taxes a nonresident only on work physically performed in Arkansas. The Department’s own 2025 instructions say so in a sentence: remote work income is taxed only for the portion performed physically in Arkansas. So an employee who lives in another state and works from home for a Little Rock company owes Arkansas nothing on the days at home and owes Arkansas on the days spent in the Arkansas office; the employer should withhold only on the Arkansas days, and the employee files an AR1000NR for them. The reverse is also true. An Arkansas resident who works from home for an out-of-state employer owes Arkansas on all of it as a resident, and if the employer’s state tries to tax the days worked in Arkansas, Arkansas gives the credit on AR1000TC for whatever that state collects on income Arkansas also taxes. Keep a calendar of where you worked; a day count is the whole case.

Military

Active-duty pay is exempt from Arkansas tax, and a servicemember must still file to claim the exemption. A servicemember with a home of record elsewhere who is stationed in Arkansas is a nonresident, files Form AR-NRMILITARY, and owes Arkansas only on any non-military Arkansas income. A spouse whose servicemember’s home of record is not Arkansas is exempt on his or her income under the Military Spouses Residency Relief Act, by checking the military spouse box and attaching Form AR-MS with the servicemember’s W-2 or leave and earnings statement. Military retirement pay is exempt in full for residents.

Retirement income follows you

Federal law bars any state from taxing retirement income paid to someone who no longer lives there. A pension earned over thirty years in another state and paid to a new Arkansas resident is Arkansas’s to tax, above the $6,000 exclusion, and the former state cannot touch it. An Arkansas pension paid to a retiree who moves away is taxed only by the new state. In the move year, each pension or IRA payment is allocated to the state you lived in when it arrived, so a retiree who moves here on July 1 reports the second half of the year’s 1099-R in column C and takes the $6,000 exclusion against it. Social Security is exempt in Arkansas at any time. The rules are in Arkansas for retirees.

Selling the old house, buying the new one

Gain on a principal residence is excluded up to $250,000, or $500,000 for a married couple filing on the same return, on the federal two-of-five-years test. Gain above the exclusion on a home sold after you became an Arkansas resident is Arkansas income, and half of it is excluded as a long-term gain on Schedule AR1000D. Gain on a home sold before the move belongs to the former state. The new Arkansas home should be registered with the county assessor for the homestead property tax credit, $600 on the bill paid in 2026 and $675 for assessment years from 2026; it is not claimed on the income tax return. And Arkansas still deducts moving expenses: if you moved for a job and the new workplace is at least 50 miles farther from your old home than your old workplace was, the cost of moving your household goods and travel is an adjustment on Form AR3903 and AR1000ADJ, even though the federal deduction has been suspended since 2018. Reimbursements your employer included in your wages are reported as income.

The year you move: what to do

In the year after the move, file the AR1000F as a full-year resident. If the former state later asks why you stopped filing, the move-year part-year return and the documents in the first row answer it.