How Much Is Sales Tax in Arkansas?

Sales tax in Arkansas is a consumption tax applied to the sale of tangible personal property and certain services. This system impacts consumers at the point of purchase and businesses responsible for collection and remittance. Understanding how sales tax functions in Arkansas helps ensure compliance and allows consumers to anticipate the full cost of goods and services.

The State Sales Tax Rate

Arkansas imposes a statewide sales tax rate of 6.5%. This rate is the foundational component of the total sales tax applied to eligible transactions across the state. Regardless of the specific city or county, it is consistently applied to gross receipts from taxable items, representing the base charge before any additional local taxes. This uniform state rate ensures a consistent tax burden throughout Arkansas.

Understanding Local Sales Taxes

Beyond the statewide sales tax, local jurisdictions in Arkansas levy their own sales taxes. These local taxes, including county, city, and special district rates, are added on top of the state rate. The specific combination means the total sales tax rate varies significantly by transaction location. For example, a purchase in one city might have a different combined rate than in a neighboring city or unincorporated area.

The Arkansas Department of Finance and Administration (DFA) provides online tools to determine these rates. These lookup tools allow searching by address or zip code to identify applicable city, county, and special sales tax rates. The combined state and local rates can result in a total sales tax as high as 11.5% in some areas.

What is Taxed and What is Exempt

In Arkansas, sales tax applies to gross receipts from the sale of tangible personal property, including most physical goods. Certain services are also subject to sales tax, such as charges for gas, water, electricity, and most solid waste disposal services. Telecommunication services, including telephone and prepaid telecommunications, are also subject to sales tax. Various repair services are taxable, and body modifications like tattoos, electrolysis, and piercings are considered taxable services. Shipping charges associated with a sale are taxable unless billed separately by a third-party carrier.

While many goods and services are taxable, Arkansas law provides specific exemptions. Unprepared food items, such as groceries for home consumption, and prescription medications are exempt. Certain agricultural items, including feedstuffs, medicines, chemicals, fertilizers, and new or used farm equipment, qualify for exemptions when used in commercial production. Machinery and equipment used directly in manufacturing processes, particularly for new facilities or as replacements, may be exempt. Sales for resale are not taxed if the purchaser has a valid retail permit, and sales to government agencies or specific nonprofit organizations are also exempt.

Putting It All Together: Calculating Sales Tax

Calculating the total sales tax on a purchase in Arkansas involves combining the state and applicable local rates. Once the specific local rates for the transaction location have been determined, these rates are added together. For instance, if a county has a 1.5% sales tax and a city within that county has a 2.0% sales tax, these percentages are added to the 6.5% statewide rate, resulting in a combined rate of 10.0% (6.5% + 1.5% + 2.0%).

To calculate the sales tax amount, this combined rate is then applied to the taxable purchase price. For example, on a $100 taxable item with a 10.0% combined rate, the sales tax would be $10.00 ($100 x 0.10). The final price paid by the consumer would be the original purchase price plus the calculated sales tax.