Arkansas · 401(k) Contribution
401(k) Contribution in Arkansas (2026)
Pre-tax 401(k) contributions reduce 2026 taxable wages up to the $24,500 employee deferral limit, with catch-up rules for eligible older workers. Arkansas has a progressive income tax with a top rate of 3.9%, so a Arkansas filer's combined marginal rate on the next dollar at $52,528 of income is about 15.9% (12% federal + 3.9% AR).
2026 savings example for Arkansas
Planning estimate for a single filer earning $52,528 (Arkansas median household income in LevyIO's state dataset) who removes $5,000 from taxable income. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; AR tax uses the state brackets in LevyIO's dataset and assumes the state follows the federal treatment.
Estimated total savings
$795
Federal savings
$600
$4,123 → $3,523 · 12% bracket
AR state savings
$195
$1,865 → $1,670 · 3.9% marginal
Combined marginal rate
15.9%
≈ $159 saved per $1,000 deducted
Statutory maximum for this item in LevyIO's dataset: $24,500.
Federal × Arkansas marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The AR column is the state marginal rate at the midpoint of each range. The last column is the tax saved per $1,000 deducted at that combined rate.
| Federal bracket | Gross income (single) | AR marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 3.9% | 13.9% | $139 |
| 12% | $28,500 - $66,500 | 3.9% | 15.9% | $159 |
| 22% | $66,500 - $121,800 | 3.9% | 25.9% | $259 |
| 24% | $121,800 - $217,875 | 3.9% | 27.9% | $279 |
| 32% | $217,875 - $272,325 | 3.9% | 35.9% | $359 |
| 35% | $272,325 - $656,700 | 3.9% | 38.9% | $389 |
| 37% | Over $656,700 | 3.9% | 40.9% | $409 |
Eligibility & forms
Employees with employer-sponsored 401(k) plans
- $24,500 employee elective deferral limit for 2026
- $32,500 total if age 50+ with regular catch-up
- $35,750 total if age 60-63 and the plan allows the higher catch-up
- Pre-tax contributions reduce taxable wages; Roth 401(k) contributions do not
Federal forms: W-2
Arkansas filing notes
Maximize the 50% capital gains exclusion on Arkansas-based business or property sales. The state standard deduction is low ($2,470 single), so itemizing may be worthwhile.
Common mistakes: Not maximizing employer match; Over-contributing across multiple plans; Treating Roth 401(k) contributions as a current-year deduction; Ignoring payroll year-to-date deferrals after changing jobs.
Frequently asked questions
How much can the 401(k) Contribution save a Arkansas taxpayer in 2026?
In LevyIO's example, a single filer with $52,528 of income (the Arkansas median household income in our state dataset) who removes $5,000 from taxable income saves about $600 in 2026 federal tax (12% marginal bracket) plus about $195 in Arkansas tax (3.9% state marginal rate), roughly $795 combined. It is a planning estimate computed from the 2026 IRS brackets and LevyIO's AR bracket data, not a survey figure.
What is the Arkansas income tax rate for 2026?
Arkansas has a progressive income tax with a top rate of 3.9%. The AR standard deduction in LevyIO's dataset is $2,470 single / $4,940 married. Two brackets: 2% and 3.9% top rate. 50% capital gains exclusion on Arkansas assets. Highest combined sales taxes.
Who qualifies for the 401(k) Contribution in Arkansas?
Employees with employer-sponsored 401(k) plans. The federal rules are the same in every state; the requirements are: $24,500 employee elective deferral limit for 2026; $32,500 total if age 50+ with regular catch-up; $35,750 total if age 60-63 and the plan allows the higher catch-up; Pre-tax contributions reduce taxable wages; Roth 401(k) contributions do not. Arkansas filers should confirm on the AR return whether the state follows the federal treatment.
Which forms do I file to claim the 401(k) Contribution?
Federal: W-2. Arkansas: check the Arkansas Department of Finance and Administration instructions for the matching state schedule. Common mistakes: Not maximizing employer match; Over-contributing across multiple plans; Treating Roth 401(k) contributions as a current-year deduction; Ignoring payroll year-to-date deferrals after changing jobs.
401(k) Contribution in other states
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.