Arkansas is among the top 20 most burdensome states in the country. According to Tax Foundation, which ranks the state at at number 17, the overall tax burden for residents is 10.1%. The average individual income tax rate in Arkansas was 6.9%, according to the group's most recent data. While they may feel the pinch at tax time, Arkansas residents may feel some relief when it comes to property taxes because the state has one of the lowest property tax rates. These taxes are imposed on real property and personal property, which includes personal vehicles, boats and all-terrain vehicles, as well as business personal property such as furniture, machinery and other equipment. Property tax revenue is an important source of funding for school districts and city and county governments in Arkansas. It also helps pay for community colleges, county hospitals, libraries, parks and other public services delivered at the local level.

Arkansas Property Tax Basics

In Arkansas, property assessment and tax collection activities are administered at the county level. The county tax assessor is responsible for valuing real and personal property in the county at its estimated full market value on Jan. 1 of the assessment year. The assessor conducts a county-wide reappraisal of real property on a three- or five-year cycle. Reappraisals are conducted in other years, when required, to account for property improvements. In the case of personal property, owners are responsible for reporting taxable property to the assessor's office no later than May 31 of each year. All vehicles in the state require a current tax assessment before vehicle tags can be renewed.

The county tax collector sends out property tax bills by July 1 each year. The tax bill is calculated by first dividing the market value of the property by five. The resulting figure is known as the assessed value of the property, which is used for tax calculation purposes. A home valued by the assessor's office at $100,000, for example, has an assessed value of $20,000. This applies to residential and commercial real property and all taxable personal property. The property tax rate covering a given property is then applied to the assessed value of the property to calculate the tax bill. Property tax is due on Oct. 15. In Arkansas, the assessed value cannot increase by more than 5% in a single year. That means the assessed value can only increase by 5% even if the market value of the property doubles, triples or rises even more.  

A homestead tax credit of $350 is available to homeowners who are permanent residents in an Arkansas home. The property owner must register with the tax assessor's office by Oct. 15 to receive the credit in the current year. The credit only applies to one residential property per taxpayer. If the property owner's full property tax bill is less than $350, then the credit is limited to the amount of the tax bill.

Average Property Taxes in Arkansas

According to SmartAsset, the statewide average effective property tax rate for homes in Arkansas as of 2018 was 0.62%. So a home worth $250,000 in the state would average an annual tax payment of $1,548. That's well below the national average; at the rate of 1.21%, a home of the same value would net an annual payment of $3,028.  

Average rates varied widely depending on the county. At the high end of the scale, Pulaski County had an average property tax rate of 0.80%. There, the median home value of $144,000 would cost a homeowner an average of $1,154 in property taxes for the year. Stone County reported the lowest effective tax rate at 0.39%, where the median home value of $104,800 would cost $413 a year in property taxes. 

How Arkansas Compares to the Nation and to Nearby States

To compare states with vastly different tax systems, it helps to focus on property tax rates paid by typical homeowners. In Arkansas, owner-occupants paid an average effective tax rate of just 0.62% on the market value of their homes. This is the 10th-lowest rate in the nation and about half the national average rate of 1.21%. The state's generous homestead tax credit, introduced in 2000, is an important factor in Arkansas' low tax rate for homeowners.

Most of Arkansas' neighboring states have higher tax rates. Texas has the highest average rate for owner-occupied property in the region at 1.86%, followed by Missouri at 1.00%, Oklahoma at 0.89%, Mississippi at 0.80% and Tennessee at 0.75%. At 0.51%, Louisiana is the only state in the region with a lower average rate than Arkansas.

The Bottom Line

Arkansas may be among the top 20 states with the largest tax burden on its residents, but it is a good place for homeowners. Property tax, which is levied on different kinds of personal property including homes, cars, boats, all-terrain vehicles and business personal property, is relatively low. As the 10th cheapest in the nation, Arkansas' property taxes are well below the national average, and come in lower when compared to most of its neighboring states. Homeowners who claim a principal residence in Arkansas can also qualify for an exemption and reduce their property tax burden. 

Delaware Property Tax Guide

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