Questions & Answers

What other types of income are excluded from Arkansas state tax?

Tax-exempt income that you must enter on your tax return include the following:

  1. Money you received from a life insurance policy because of the death of the person who was insured.

    Note: You must include as taxable income any interest payments made to you from the insurer (the insurance company that issued the policy).

  2. Amounts you received as child support payments

  3. Gifts, inheritances, bequests, or devises

  4. Interest you received from direct United States obligations, its possessions, the State of Arkansas, or any political subdivision of the State of Arkansas. Obligations include bonds and other evidence of debt issued pursuant to a government unit's borrowing power. (Interest received on tax refunds is not exempt income, because it did not result from a debt issued by the United States, the State of Arkansas, or any political subdivision of the State of Arkansas.) Interest from government securities paid to individuals through a mutual fund is exempt from tax.

  5. VA benefits, Workers' Compensation, Railroad Retirement benefits, and related supplemental benefits

  6. Disability Income MAY BE exempt from tax pursuant to Internal Revenue Code 104.

Tax-exempt items that we have already included for you, which you should not enter on this screen are:
  • Military Pension
  • Social Security Benefits
  • Interest Received from Arkansas
  • Interest Received from Direct U.S. Obligations
  • Arkansas Electronic Gambling Winnings
  • Rental Value of a Minister's Home
  • Rural Physician Income

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