Active-duty pay
Partially Exempt
First $9,000 of active-duty pay exempt from Arkansas income tax.
State Guide · AR
Arkansas — Military Tax Treatment
Arkansas draws a clear line: first $9,000 is exempt for Guard and Reserve drill pay, and all military retirement is fully exempt. If your total drill pay is modest, you may stay entirely under the $9K threshold.
Tax treatment at a glance
Guard & Reserve drill pay
Partially Exempt
First $9,000 of Guard or Reserve pay is exempt from Arkansas income tax. Arkansas statute explicitly includes National Guard and Reserve members in this exemption. Pay above $9,000 is taxable.
Military retirement pay
Fully Exempt
Military retirement pay fully exempt.
The numbers · verified for tax year 2025
Top marginal rate
3.9%
Retirement-pay exemption
Full
Military retirement pay and survivor benefits are 100% exempt from Arkansas income tax (Act 141 of 2017), effective tax year 2018 onward — no cap, no age requirement. Active-duty pay is also fully exempt under Act 1408 of 2013 (the old $9,000 partial exemption was superseded).
Standard deduction
For 2025 the standard deduction is $2,410 single / $4,820 MFJ. The top rate dropped to 3.9% effective Jan 1, 2025 (Act 1, 2nd Extraordinary Session of 2024).
VA disability compensation
Always tax-free
Federally tax-free under 38 USC § 5301. No state taxes VA disability compensation as income — Arkansas included.
Survivor Benefit Plan (SBP)
Follows retirement
Arkansas exempts military retirement — SBP annuities are generally exempt under the same provision.
Federal rules that override state law
SCRA — Servicemembers Civil Relief Act
Active-duty servicemembers pay state income tax only to their state of legal domicile — not the state where they are stationed. If you are from Texas and stationed in Arkansas, Arkansas cannot tax your military pay. This applies during all active duty periods and during Guard/Reserve mobilizations on federal (Title 10) orders.
MSRRA — Military Spouses Residency Relief Act
Military spouses can maintain their home-state domicile even when living in a different state due to their servicemember's orders. A spouse who is a Texas resident following their servicemember to Arkansas can keep Texas as their tax domicile and avoid Arkansas state income tax on their wages.
Guard & Reserve — the SCRA gap
SCRA pay protections apply during federal (Title 10) activation orders. During routine drill weekends and state-only activations, Guard and Reserve members are state residents serving in their home state — SCRA does not protect their drill pay from state income tax. Whether Arkansas exempts that pay is the state-specific question answered above.
Filing watch-outs
- 01Track Guard drill and other military pay combined — the $9K cap applies to total military pay
- 02Retirement exemption is claimed on AR1000 — no separate form needed
Veteran-specific tax benefits
Property tax exemptions for disabled vets.
Official authority
https://www.dfa.arkansas.gov/ ↗State tax law changes annually. Verify current rules with the Arkansas Department of Revenue before making any tax decision.
Arkansas military tax — common questions
Does Arkansas tax military retirement pay in 2026?
Arkansas fully exempts military retirement pay. Military retirement pay fully exempt.
Does Arkansas tax active-duty military pay?
Arkansas partially taxes active-duty military pay for state residents. First $9,000 of active-duty pay exempt from Arkansas income tax. Under the SCRA, Arkansas can only tax the military pay of service members who are legally domiciled in Arkansas — not those merely stationed there.
Does Arkansas tax National Guard and Reserve drill pay?
Arkansas partially taxes Guard and Reserve drill pay. First $9,000 of Guard or Reserve pay is exempt from Arkansas income tax. Arkansas statute explicitly includes National Guard and Reserve members in this exemption. Pay above $9,000 is taxable.
Is VA disability compensation taxed in Arkansas?
No. VA disability compensation is federally tax-free under 38 U.S.C. § 5301, and no state — including Arkansas — taxes it as income.
If I'm stationed in Arkansas but claim another state, can Arkansas tax my military pay?
No. Under the Servicemembers Civil Relief Act (SCRA), active-duty pay is taxable only by your state of legal domicile, not the state where you are stationed. If your domicile is elsewhere, Arkansas cannot tax your active-duty military pay. Military spouses get the same protection under the MSRRA.
Related tools
Other state guides