DFA: Arkansas wages could rise due to adjustment of income tax tables
LITTLE ROCK, Ark. – The Arkansas Department of Finance and Administration (DFA) has told some 80,000 employers in the state that income tax withholding tables will change effective January 1 2021. As a result, the Arkansans could see an increase in the amount of their paychecks.
This is the second change recently made by DFA to the withholding tax tables. The first adjustment took place on March 1, 2020. This adjustment put $ 15 million every month in the pockets of the Arkansans via increased paychecks. The January 2021 adjustment will put an additional $ 7 million each month in paychecks.
The change in withholding tax is not an increase or reduction of tax, but with the amendment of the law that reduces the highest tax rate of personal income tax by 6 , 6% to 5.9% next month, the change in withholding will put this reduction in paychecks from January 2021. Without this change, many Arkansans would not see the bulk of their tax reduction until. to have received it in their tax refund in 2022.
“Due to three significant income tax cuts established by the Legislature and Governor Hutchinson, it is again appropriate to adjust the withholding tables to match lower tax rates,” said Charlie Collins, DFA Revenue Commissioner. “Employees who wish to maintain a higher annual tax refund can simply ask their employer to adjust the AR4EC form to increase the amount withheld from each paycheck. This gives the Arkansans the option of a larger annual payback compared to a raise in salary. “
Employers can find the new tables at http://ar.gov/WithholdingTaxTables.
Additional information on DFA is available at www.dfa.arkansas.gov.