§ 26-51-201 - Individuals, trusts, and estates. - Arkansas Statutes

26-51-201. Individuals, trusts, and estates.

(a) A tax is imposed upon, and with respect to, the entire income of every resident, individual, trust, or estate. The tax shall be levied, collected, and paid annually upon the entire net income as defined and computed in this chapter at the following rates, giving effect to the tax credits provided hereafter, in the manner set forth:

(1) On the first two thousand nine hundred ninety-nine dollars ($2,999) of net income or any part thereof, one percent (1%);

(2) On the next three thousand dollars ($3,000) of net income or any part thereof, two and one-half percent (21/2%);

(3) On the next three thousand dollars ($3,000) of net income or any part thereof, three and one-half percent (31/2%);

(4) On the next six thousand dollars ($6,000) of net income or any part thereof, four and one-half percent (41/2%);

(5) On the next ten thousand dollars ($10,000) of net income or any part thereof, six percent (6%);

(6) On net income of twenty-five thousand dollars ($25,000) and above, seven percent (7%).

(b) However, no state income tax shall be due this state from a trust or estate created by a nonresident donor, trustor, or settlor, or by a nonresident testator even though administered by a resident trustee or personal representative except on income derived from:

(1) Lands situated in this state, including gains from any sale thereof;

(2) Any interest in lands situated in this state, including, without limitation, chattels real, including gains from any sale thereof;

(3) Tangible personal property located in Arkansas, including gains from any sale thereof; and

(4) Unincorporated businesses domiciled in Arkansas.

(c) No income tax shall be due the State of Arkansas from a nonresident beneficiary on income received from a trust being administered by a resident trustee except on income derived by the trust from:

(1) Lands situated in this state, including gains from any sale thereof;

(2) Any interest in lands situated in this state, including, without limitation, chattels real, including gains from any sale thereof;

(3) Tangible personal property located in Arkansas, including gains from any sale thereof; and

(4) Unincorporated businesses domiciled in Arkansas.

(d) (1) Not later than December 15 of 1998, and each subsequent calendar year, the director shall prescribe a table which shall apply in lieu of the table contained in 26-51-201(a) with respect to taxable years beginning in the succeeding calendar year. The director shall increase the minimum and maximum dollar amounts for each rate bracket (rounding to the nearest $100) for which a tax is imposed under such table by the cost-of-living adjustment (COLA) for such calendar year and by not changing the rate applicable to any rate bracket as adjusted. The yearly COLA increase in each rate bracket as provided in subdivision (d)(2) of this section shall apply to the brackets as contained in 26-51-201(a) as in effect on January 1, 1998.

(2) For purposes of subdivision (d)(1) of this section, the cost-of-living adjustment for any calendar year is the percentage (if any) by which the CPI for the calendar year preceding the taxable year exceeds the CPI for the calendar year 1997, not to exceed three percent (3%). The CPI for any calendar year is the average of the Consumer Price Index as of the close of the 12-month period ending on August 31 of such calendar year. "Consumer Price Index" means the last Consumer Price Index for all urban consumers published by the Department of Labor.

(3) The new tables, as adjusted, shall apply for tax returns filed for taxable year 1999 and thereafter, and shall be used by the director in preparing the income tax withholding tables pursuant to 26-51-907.