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Does Arkansas Tax 403(b) and 457(b) Withdrawals? (2026)

Updated October 16, 2026. Quick answer: Arkansas gives a $6,000 exemption per taxpayer for benefits from “public or private employment-related retirement systems, plans, or programs”; the AR1000 instructions do not name 403(b) or 457(b) plans, so whether a given plan fits is not stated by name.

More state retirement-income schedules, line by line: Arkansas AR1000F retirement exemptions.

Arkansas at a glance

ItemWhat the documents say
How the state treats 403(b) and 457(b) withdrawalsThe documents read do not say whether these plans qualify
Do the state’s documents name these plans?The documents read name neither 403(b) nor 457(b) plans
Retirement exclusion or creditExemption of the first $6,000 per taxpayer from employment-related retirement systems, plans or programs
Public-employee pension ruleYes, public employment-related systems are included in the exemption
Rate in the documents read3.9% for 2025; 3.7% for tax years beginning on or after January 1, 2026
Changed for 2026?Act 2 of 2026 lowers the top rate to 3.7% for tax years beginning on or after January 1, 2026

What the Arkansas documents say

The AR1000 instructions say “You are entitled to a $6,000 exemption from the taxable amount” of the retirement benefits they describe. The instructions add that the exemptions for employer plans and for a traditional IRA together cannot exceed $6,000 per taxpayer.

The same instructions print the 2025 rate: “Marginal Income Tax rates for 2025 are 3.9%, as amended in 2024”. Act 2 of the First Extraordinary Session of 2026 applies a lower top rate, 3.7%, “For tax years beginning on or after January 1, 2026”.

Withholding and federal tax

Whether a state withholds is a separate rule: see state withholding on retirement withdrawals. Federal rules: 403(b) withdrawal rules and 457(b) withdrawal rules. The IRS says pension and annuity payments from a qualified employer plan have “all or some portion of the amounts you receive may be taxable”.

What the documents do not say

  • The instructions do not name 403(b) or 457(b) plans, so they do not say by name that either is an employment-related plan for the exemption.
  • The instructions are for tax year 2025; the 2026 rate comes from the Act.

Common mistakes

  • Assuming Arkansas’s rule for a 401(k) or IRA also covers a 403(b) or 457(b): read whether its documents name the plan.

Related: whether Arkansas taxes 401(k) and IRA withdrawals, Arkansas retirement taxes, whether Arkansas taxes pensions, 403(b) withdrawal rules, 457(b) withdrawal rules, and state withholding on retirement withdrawals.

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Sources

Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.

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