Arkansas lesson 5 of 6
Arkansas LLC taxes, licences and permits
Arkansas taxes LLC pass-through income through its individual income tax rather than a separate entity-level income tax, and Arkansas has cut its top rate several times in recent years.
How members are taxed
An Arkansas LLC taxed as a partnership or sole proprietorship for federal purposes passes income through to its members, who pay Arkansas individual income tax on their share of profit. Following a May 2026 special legislative session, Arkansas cut its top individual income tax rate to 3.7%, effective January 1, 2026, down from 3.9% for the 2024 tax year. Confirm the current year's bracket and rate on the Department of Finance and Administration's site before filing, since Arkansas has reduced this rate multiple times in recent years and the same special session also cut the top corporate rate.
An LLC that elects C corporation tax treatment instead owes Arkansas corporate income tax on its Arkansas-source income; check the current corporate rate on DFA's site, since it was also reduced in the same 2026 legislation.
Sales tax, withholding and local licensing
If you sell taxable goods or services, register with DFA for a sales and use tax permit before you start selling. If you have employees, register for withholding tax through DFA at the same time.
Arkansas has no single statewide general business licence. Many cities and counties require a local business licence or privilege licence, and certain professions, for example construction contractors above a size threshold, cosmetology, and healthcare, require a state board licence separate from the Secretary of State filing.
Check with the city or county where your LLC operates for local licensing requirements, since these are set locally rather than by the Secretary of State.
Key takeaways
- The top individual income tax rate is 3.7%, effective January 1, 2026, down from 3.9% for 2024.
- Register with DFA separately for sales tax and withholding once either applies to your LLC.
- There is no statewide business licence; check city, county and any relevant state board.
Frequently asked questions
Does Arkansas have a corporate franchise tax separate from the LLC franchise tax?
Arkansas's franchise tax applies to corporations, LLCs, banks and insurance companies alike under the same statute, but the LLC amount is a flat $150 rather than the capital-based calculation used for corporations.
Is there a statewide business licence in Arkansas?
No. Licensing depends on your city or county and on any state board that regulates your specific profession or industry.
Official sources
Or let us file your Arkansas LLC for you
Everything above is yours to use for free. If you would rather hand it over, we prepare and file the Certificate of Organization (Form LL-01), act as your registered agent, and track your ongoing deadlines.
Last reviewed: September 2026 - reviewed by Gullia Filing Legal & Formation Team