2025 Tax Year

Arkansas Side Hustle Tax Calculator

Calculate your Arkansas state tax (3.90%), federal tax, and self-employment tax on 1099 income.

AR3.90%

3.1 million residents

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2025 rates

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Last updated: January 2026 · Data from IRS Rev Proc 2024-40

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Side Hustle Income *

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Arkansas side hustlers benefit from recent tax reforms that have lowered rates significantly. The Natural State now has a simplified two-bracket progressive income tax with a top rate of just 3.9%—making it one of the more affordable states for freelancers and gig workers in the South.

Arkansas Tax Guide

How Side Hustle Taxes Work in Arkansas

Arkansas reformed its tax system with two simple brackets for 2025:

**Arkansas state tax rates (2025):** - 2.0% on income up to $4,500 - 3.9% on income over $4,500

**Key features:** - No local income taxes in Arkansas - Simplified from previous multi-bracket system - Rate reductions have been ongoing since 2022

For most side hustlers with meaningful income, you'll pay the 3.9% rate on the majority of your earnings.

Example

What Arkansas Side Hustlers Owe

Let's say you're a single filer in Little Rock with a $48,000 W-2 job and $12,000 in side hustle income from selling crafts online, with $1,500 in business expenses.

**Your estimated taxes on the side hustle:** - Net self-employment income: $10,500 - Federal SE tax (15.3% of 92.35%): ~$1,485 - Federal income tax on side income: ~$2,310 (22% bracket) - Arkansas state tax (3.9%): ~$410 - **Total additional tax: ~$4,205**

Your effective tax rate on the side hustle is about 40%.

Important Dates

Arkansas Tax Deadlines 2025

Arkansas estimated tax deadlines: - **Q1**: April 15, 2025 - **Q2**: June 16, 2025 - **Q3**: September 15, 2025 - **Q4**: January 15, 2026

Use Arkansas Form AR1000ES for state estimated tax payments.

Save Money

Common Deductions for Arkansas Freelancers

Arkansas freelancers benefit from the state's low 3.9% top rate and conformity to federal deductions. **Home office expenses**: Claim dedicated business space using simplified ($5/sq ft) or actual expense method. **Business mileage**: 67 cents/mile for 2025; important for those serving clients in Little Rock, Fayetteville, or across the state. **Equipment and supplies**: Computers, cameras, tools, and office supplies are deductible. **Professional services**: Accounting, legal, and tax preparation fees are fully deductible. **Health insurance premiums**: Self-employed individuals can deduct 100% of health insurance costs. **Retirement contributions**: SEP-IRAs and Solo 401(k)s reduce federal AGI, which Arkansas uses as its starting point—saving you at federal rate plus 3.9%. **Marketing expenses**: Website costs, business cards, and promotional materials are deductible. Arkansas uses federal AGI as its starting point, so all Schedule C deductions automatically reduce your AR taxes. With the recent tax cuts to 3.9%, Arkansas is now one of the more affordable states for side hustlers.

Common Questions

Arkansas Side Hustle Tax FAQ

What is Arkansas's top tax rate?

Arkansas has a top income tax rate of 3.9% for 2025, applying to income over $4,500. The lower bracket is 2.0% on the first $4,500.

Does Arkansas have local income taxes?

No, Arkansas has no local or city income taxes. You only pay the state tax rate on your side hustle income.

Has Arkansas been cutting taxes?

Yes, Arkansas has significantly reduced its income tax rates in recent years. The top rate dropped from 5.9% in 2021 to 3.9% in 2025.

Do I need to register my side hustle in Arkansas?

Sole proprietors using their legal name don't need state registration. If using a trade name (DBA), file with the Secretary of State. LLCs must register with the Arkansas Secretary of State. Sellers may need a Sales Tax Permit from the Department of Finance and Administration.

When are Arkansas quarterly estimated taxes due?

Arkansas follows federal quarterly deadlines: April 15, June 16, September 15, and January 15. Use Form AR1000ES for payments.

Is Arkansas becoming more tax-friendly for freelancers?

Yes, Arkansas has dramatically lowered its top rate from 5.9% to 3.9% since 2021. Combined with no local income taxes, Arkansas is now competitive with many lower-tax states for side hustlers.

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