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Arkansas governor signs income, property tax cuts into law
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Date:2025-03-12 02:33:43
LITTLE ROCK, Ark. (AP) — Arkansas Gov. Sarah Huckabee Sanders on Wednesday signed legislation cutting the state’s property and income taxes after lawmakers wrapped up a special session where they also approved legislation to keep the state’s hunting and fishing programs running.
Sanders signed the measure cutting the state’s top corporate and individual income tax rates, and another raising the homestead property tax credit, hours after the predominantly Republican Legislature adjourned the session that began Monday.
The cuts are the latest in a series of income tax reductions Arkansas has enacted over the past several years. Sanders, a Republican, has signed three cuts into law since taking office last year and has said she wants to phase the levy out over time.
“We are moving in the right direction and we’re doing so responsibly,” Sanders said at a news conference before signing the legislation.
The measures will cut the state’s top individual tax rate from 4.4% to 3.9% and the top corporate rate from 4.8% to 4.3%, retroactively, beginning Jan. 1. Finance officials say the cuts will cost about $483 million the first year and $322 million a year after that.
Supporters argued the state is in a healthy position for the reductions, noting that Arkansas is forecast to end the fiscal year with a $708 million surplus.
But opponents of the measures have said the benefits are too skewed toward higher earners and that the state should instead put more money toward reducing the high maternal mortality rate and providing more services for people with disabilities.
“Now is not the time to be underfunding the programs that deal with these problems,” Democratic Rep. Denise Garner said before the House voted on the cuts Tuesday.
The tax cut legislation also requires the state to set aside $290 million from the its surplus into a reserve fund in case of an economic downturn.
The other legislation signed by Sanders increases the homestead tax credit from $425 to $500, retroactive to Jan. 1. That cut will cost $46 million.
Lawmakers had expected to take up tax cuts later this year, but that plan was accelerated after the Legislature adjourned its session last month without a budget for the state Game and Fish Commission. That created uncertainty about whether the agency, which issues hunting and fishing licenses and oversees wildlife conservation, would operate beyond July 1.
Sanders on Wednesday signed a compromise budget proposal for the agency aimed at addressing concerns from some House members who had objected to the maximum pay for the agency’s director.
The new measure includes a lower maximum salary for the director, and requires legislative approval to increase his pay by more than 5%.
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