Arkansas Sales Tax

As a business owner, you must collect sales tax from your customers and report it to the state of Arkansas.

Arkansas Sales Tax compliance is a significant challenge for many businesses, especially as more states are expanding their sales taxes to include services. Failure to file or remit collected sales tax on time can result in late fees and interest charges. Fortunately, there are ways to minimize the risk of noncompliance. First, make sure you have the right information before charging customers. This can be done using a free sales tax calculator or a free Arkansas sales tax lookup tool. Arkansas has one of the highest sales tax rates in the country, with a state rate of 6.5% and an average local rate of 2.97%. These taxes are a significant burden for the general public, especially low-income households, and they should be reduced. You can also find local rates by searching for your county and city. The Arkansas Department of Finance and Administration also offers a list of combined state and local sales tax rates.

The sales tax is a regressive tax, meaning that lower-income households pay a larger share of their income in taxes. It is important to understand this effect when designing tax policies. One possible reform is to include more services in the sales tax base while maintaining the current exemptions for goods.

Do I Have to Pay Arkansas Sales Tax?

The first step in determining whether or not you must pay Arkansas sales tax is to determine whether you have nexus with the state. Nexus is the legal term for a business’s connection to a state, and it’s defined by how much business the company does in the state. For example, Arkansas considers vendors with inventory in the state to have nexus even if they don’t have physical presence there.

After determining that you have nexus, the next step is to register for a sales tax permit. The cost of registering for a permit is $50. Once registered, you must collect and remit sales tax on all products sold in the state. You can do this by filing returns on a monthly or quarterly basis. You may need to file more frequently if you are a large seller.

What is taxable?

  • The tax applies to the sale of most tangible personal property, such as:
    • Clothing
    • Food
    • Electronics
    • Furniture
    • Building materials
  • Some services are also taxable, including:
    • Hotel and motel stays
    • Restaurant meals
    • Repair and maintenance services

What is exempt?

  • Certain items are exempt from sales tax, such as:
    • Groceries (excluding prepared foods)
    • Prescription drugs
    • Farm machinery and equipment
    • Educational materials
How to File Arkansas Sales Tax
Arkansas Sales Tax 1

How to File Arkansas Sales Tax?

There are three main ways to report Arkansas Sales Tax, depending on your preference:

1. Online Filing: This is the easiest and fastest way to file. You don’t need a specific form when filing online. You simply enter your sales and tax data directly into the Arkansas Taxpayer Access Point (ATAP) online portal.


2. Mail Filing: You need to use Form ET-1 to report your sales and tax data.

3. AutoFile: You can use a third-party service like TaxJar or Avalara to automate your sales tax filing.

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