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Student Loan Forgiveness Tax Exclusion in Arkansas 2026

Calculate your student loan forgiveness tax exclusion tax savings in Arkansas. With Arkansas's 4.7% top state tax rate, your combined savings are higher.

Arkansas Tax Overview

State Income Tax
4.7%
progressive
Sales Tax
6.5%
avg combined: 9.44%
Property Tax Rate
0.62%
Median Income
$52,528

Top rate reduced to 4.7%. 50% capital gains exclusion on Arkansas assets. Highest combined sales taxes.

Arkansas Income Tax Brackets (Single)

0%
$0 - $4,400
2%
$4,400 - $8,800
3%
$8,800 - $13,100
3.4%
$13,100 - $22,200
4.4%
$22,200 - $38,500
4.7%
$38,500 +
Your bracket
$1,335
Est. Total Savings
No Limit
Max Deduction
Above-the-Line
Deduction Type
26.7%
Combined Tax Rate

Student Loan Forgiveness Tax Exclusion Savings Calculator for Arkansas

$
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Federal Savings

$1,100

22% bracket

Arkansas State

$235

4.7% rate

Total Savings

$1,335

26.7% combined

At a 26.7% combined tax rate in Arkansas, every $1,000 in deductions saves you $267 in taxes.

Savings by Tax Bracket in Arkansas

10%
$735
12%
$835
22%
$1,335
24%
$1,435
32%
$1,835
35%
$1,985
37%
$2,085

Includes 4.7% Arkansas state tax on top of federal savings.

Eligibility Requirements

Borrowers with student loans forgiven through 2025

  • 1Loan forgiveness through 12/31/2025 is tax-free
  • 2Applies to federal and private student loan forgiveness
  • 3Includes income-driven repayment plan forgiveness

Arkansas residents should verify that this deduction is also recognized on their state tax return for additional savings of up to 4.7%.

Common Mistakes to Avoid

  • !Not knowing forgiveness may be taxable after 2025
  • !Confusing PSLF (always tax-free) with other programs
  • !Not planning for potential state tax on forgiveness
  • !Forgetting to claim the deduction on your Arkansas state return (missing up to 4.7% additional savings)

Arkansas Filing Tips

Maximize the 50% capital gains exclusion on Arkansas-based business or property sales. The state standard deduction is low ($2,340 single), so itemizing may be worthwhile.

Required Tax Forms

Form 1099-CForm 1040

File these forms with your federal tax return to claim the student loan forgiveness tax exclusion. Arkansas may require additional state-specific forms.

Other Tax Deductions in Arkansas

Student Loan Interest Deduction

Education

~$668
est. savings

American Opportunity Tax Credit

Education

~$2,200
est. savings

Lifetime Learning Credit

Education

~$1,500
est. savings

529 Plan Contributions

Education

~$1,214
est. savings

Coverdell Education Savings Account

Education

~$364
est. savings

Educator Expense Deduction

Education

~$80
est. savings

Employer-Required Education

Education

~$3,641
est. savings

Education Savings Bond Interest

Education

~$607
est. savings

Student Loan Forgiveness Tax Exclusion in Neighboring States

Missouri

4.8% top rate (progressive)

~$6,091
+4,756 vs Arkansas

Tennessee

No state income tax

~$5,000
+3,665 vs Arkansas

Mississippi

4.7% top rate (flat)

~$6,068
+4,733 vs Arkansas

Louisiana

3% top rate (flat)

~$5,682
+4,347 vs Arkansas

Texas

No state income tax

~$5,000
+3,665 vs Arkansas

Oklahoma

4.75% top rate (progressive)

~$6,080
+4,745 vs Arkansas

Tax Calculators for Arkansas Cities

Little RockFayettevilleFort SmithSpringdaleJonesboroRogersConwayNorth Little RockBentonville

Calculate Your Full Tax Savings in Arkansas

Use our free tax calculators to optimize your entire tax return for Arkansas.

Income Tax CalculatorArkansas Income TaxFull Student Loan Forgiveness Tax Exclusion Guide

Frequently Asked Questions

How much can I save with the Student Loan Forgiveness Tax Exclusion in Arkansas?

In Arkansas, the student loan forgiveness tax exclusion can save you an estimated $1,335 per year on a $5,000 deduction. This includes $1,100 in federal tax savings and $235 in Arkansas state tax savings at the 4.7% marginal rate. The national average savings is $5,000/year.

What is the Arkansas state income tax rate?

Arkansas has a progressive income tax system with a top rate of 4.7%. Top rate reduced to 4.7%. 50% capital gains exclusion on Arkansas assets. Highest combined sales taxes.

Who qualifies for the Student Loan Forgiveness Tax Exclusion in Arkansas?

Borrowers with student loans forgiven through 2025. The eligibility requirements are the same whether you live in Arkansas or another state, as this is a federal tax deduction. However, your total savings will vary based on Arkansas's 4.7% top state tax rate.

What tax forms do I need to claim the Student Loan Forgiveness Tax Exclusion in Arkansas?

To claim the student loan forgiveness tax exclusion, you need to file Form 1099-C and Form 1040 with your federal return. Arkansas residents should also check if the state allows this deduction on their state return for additional savings of up to 4.7%. Filing status affects your deduction limits and tax bracket.

Is the Student Loan Forgiveness Tax Exclusion better in Arkansas than in states without income tax?

Yes, Arkansas residents benefit more because the state's 4.7% top income tax rate means the deduction reduces both your federal AND state tax liability. In states with no income tax (like Texas, Florida, or Nevada), this deduction only reduces federal taxes. Your combined rate of 26.7% means more savings per dollar deducted.

What is the standard deduction in Arkansas for 2026?

Arkansas's standard deduction is $2,340 for single filers and $4,680 for married filing jointly. Maximize the 50% capital gains exclusion on Arkansas-based business or property sales. The state standard deduction is low ($2,340 single), so itemizing may be worthwhile.

Related Calculators

Student Loan Interest Deduction in Arkansas

Avg savings: $550/year

American Opportunity Tax Credit in Arkansas

Avg savings: $2,200/year

Lifetime Learning Credit in Arkansas

Avg savings: $1,500/year

529 Plan Contributions in Arkansas

Avg savings: $1,000/year

Coverdell Education Savings Account in Arkansas

Avg savings: $300/year

Educator Expense Deduction in Arkansas

Avg savings: $66/year