Property Management Income Taxes In Arkansas

Updated August 7, 2026

9 min read

This guide covers how rental and management income is taxed in Arkansas: what the state takes, what the IRS takes, who has to withhold on an out-of-state owner, and when each return is due. Every figure is tied to the statute, agency rule, or published guidance that sets it, so you can confirm a rate before acting on it.

State Income Tax On Rental And Management Income

Arkansas taxes individual income with a top marginal rate of 3.90 percent for tax year 2025, applied across indexed brackets that are adjusted annually for inflation. Rental income from Arkansas property and management fee income are both subject to it. The rule that most directly affects property managers is the pass-through withholding requirement: an entity holding rental property must withhold Arkansas income tax at the top rate on each nonresident member's distributive share.

The Arkansas 2025 indexed tax brackets are $0 to $5,599 at 0.00 percent, $5,600 to $11,199 at 2.00 percent, $11,200 to $15,999 at 3.00 percent, $16,000 to $26,399 at 3.40 percent, and $26,400 to $94,700 at 3.90 percent. Above $94,700 the rate remains 3.90 percent with a declining bracket adjustment applied in $100 income steps. (Arkansas DFA, 2025 Indexed Tax Brackets)
Arkansas indexes its income tax brackets annually by a cost-of-living adjustment, rounded to the nearest $100, so bracket thresholds shift each tax year even when the rates do not. (Arkansas DFA, 2025 Indexed Tax Brackets)
A pass-through entity must withhold Arkansas income tax at the highest applicable tax rate on the share of income distributed to each nonresident member, unless a specific exception applies. The requirement covers S corporations, general and limited partnerships, limited liability partnerships, limited liability companies, and trusts not taxed as corporations for federal or Arkansas income tax purposes. (Arkansas DFA, Instructions for Form AR941PT)
A Form AR1099PT must be completed for each nonresident member whose income tax was withheld, and the amounts reported on Form AR941PT must equal the amounts on the AR1099PT forms issued. (Arkansas DFA, Instructions for Form AR941PT)
A nonresident member can be exempted from pass-through withholding by filing Form AR4PT, the nonresident member withholding exemption affidavit. (Arkansas DFA, Form AR4PT)
If the pass-through entity files a composite return, Form AR1000CR, on behalf of its nonresident members, those members do not need to file their own Arkansas income tax return unless they have Arkansas income from other sources. Tax paid on their behalf can be claimed as a withholding credit. (Arkansas DFA, Instructions for Composite Tax Return (AR1000CR))

Withholding And Employer Taxes

An Arkansas employer withholds state income tax on wages, files periodic withholding returns and an annual reconciliation, and pays unemployment insurance contributions to the Division of Workforce Services on the first $7,000 of each employee's wages. Separately, a rental-holding pass-through entity has its own withholding return, Form AR941PT, for nonresident members.

Arkansas employees complete Form AR4EC, Employee's Withholding Exemption Certificate, to set state withholding. (Arkansas DFA, Form AR4EC)
All new Arkansas withholding registrations are classified as monthly filers, reporting on Form AR941M. (Arkansas DFA, Withholding Tax Instructions)
Form AR3MAR, Employer's Annual Reconciliation of Income Tax Withheld, is due by February 28 for the previous calendar year. (Arkansas DFA, Withholding Tax Branch Due Dates)
By January 31 an employer must file Form AR941, the Employer's Annual Report for Income Tax Withheld, and pay any tax due for the previous calendar year, and must file Forms W-2 with Form ARW3 and Forms 1099 with Form 1096. (Arkansas DFA, Withholding Tax Branch Due Dates)
Form AR941PT, the Pass Through Entity Report for Income Tax Withheld, is due April 15, that is the fifteenth day of the fourth month following the end of the entity's tax year. (Arkansas DFA, Withholding Tax Branch Due Dates; Instructions for Form AR941PT)
Arkansas employers pay unemployment insurance tax on a taxable wage base of $7,000 per employee per calendar year. (Arkansas Division of Workforce Services, Employer UI Contributions)
Unemployment contributions and wages are reported on Form DWS-ARK-209B, the Employer's Quarterly Contribution and Wage Report. (Arkansas Division of Workforce Services, Form DWS-ARK-209B)

Federal Obligations

Federal rules layer on top of Arkansas's. Rental activity goes on Schedule E, buildings depreciate over 27.5 years while land does not depreciate, and vendor payments trigger Form 1099 reporting whose dollar threshold changes between the 2025 and 2026 payment years. Arkansas also requires copies of Forms 1099 and 1096 with the state by January 31.

Income and expenses from real estate rentals are reported on Schedule E (Form 1040), Supplemental Income and Loss, unless the owner provides substantial services to tenants, in which case Schedule C (Form 1040) applies. (IRS Topic No. 414, Rental Income and Expenses)
Advance rent is included in income in the year received regardless of the accounting method used. Tenant-paid expenses that cover the owner's costs are rental income, and a security deposit becomes income when it is kept because the tenant broke the lease or caused damage for which repair costs are deducted. Lease cancellation payments are also rental income. (IRS Topic No. 414, Rental Income and Expenses)
Residential rental property is depreciated over 27.5 years under the General Depreciation System, or 30 years under the Alternative Depreciation System, using the mid-month convention. Land cannot be depreciated because it does not wear out, become obsolete, or get used up. (IRS Publication 527, Residential Rental Property)
Depreciation is claimed on Form 4562, Depreciation and Amortization, starting in the year the property is placed in service and in any later year improvements are made. (IRS Topic No. 414, Rental Income and Expenses)
The information return threshold is $600 for payments made during 2025 and rises to $2,000 for payments made after December 31, 2025, with inflation adjustment in calendar years after 2026. The change was made by the One, Big, Beautiful Bill Act and affects rents and other payments on Form 1099-MISC and nonemployee compensation on Form 1099-NEC. (IRS, Instructions for Forms 1099-MISC and 1099-NEC)
Arkansas requires Forms 1099 and Form 1096 to be filed with the state by January 31, so a management company's federal and Arkansas 1099 processes share the same deadline. (Arkansas DFA, Withholding Tax Branch Due Dates)

Filing Deadlines

Arkansas puts nearly all of its income tax deadlines on April 15, including partnership and S corporation returns, which is unusual since most states follow the federal March 15 date for pass-through entities. Payroll reconciliation runs January 31 and February 28, personal property must be assessed by May 31, and property tax is payable by October 15.

The Arkansas individual income tax return, Form AR1000F, is due April 15. If April 15 falls on a weekend or holiday, the return is due the next business day. (Arkansas DFA, Deadlines and Extensions)
The Arkansas partnership return, Form AR1050, is due April 15 for calendar year filers, or the fifteenth day of the fourth month following the end of the fiscal year. (Arkansas DFA, Partnership Income Tax Return Instructions AR1050)
The Arkansas Subchapter S corporation return, Form AR1100S, and all tax payments are due April 15 for calendar year filers, or the fifteenth day of the fourth month after the end of the tax year. (Arkansas DFA, 2025 Sub-Chapter S Corporation Income Tax Instructions)
Form AR941PT for pass-through withholding is due April 15, Form AR941 and Forms W-2, ARW3, 1099 and 1096 are due January 31, and Form AR3MAR annual reconciliation is due February 28. (Arkansas DFA, Withholding Tax Branch Due Dates)
Personal property must be reported to the county assessor by May 31 or a 10 percent late assessment penalty applies, and property taxes are payable to the county collector by October 15. (Arkansas Assessment Coordination Division, Frequently Asked Questions)

Recent Changes Worth Tracking

Effective January 1, 2026: The Arkansas state reduced food tax rate dropped to 0.000 percent, so a taxpayer no longer pays state sales or use tax on purchases of food and food ingredients. Food and food ingredients continue to be subject to city and county sales and use taxes. (Arkansas DFA, State Sales and Use Tax Rate Changes)
Effective Beginning with the 2026 tax bills: The Amendment 79 homestead property tax credit increases from up to $500 to up to $600 per year. It remains limited to the dwelling used as the owner's principal place of residence and is not available on tenant-occupied rental property. (Arkansas Assessment Coordination Division, Property Tax Relief)

This page is one half of the picture. See our guide to the Arkansas taxes a management company pays directly for the rest.

Keeping This Straight

Tax rates and thresholds move more often than most operators expect, and the figures circulating in older articles go stale quickly. Check any rate against its citation before you quote it to an owner, and re-check them at the start of each tax year.

This guide is a starting point for professional managers, not tax or legal advice. For a specific filing, work with a CPA familiar with Arkansas rental property, and confirm current figures with the Arkansas Department of Finance and Administration or the IRS.