Updated October 16, 2026. Quick answer: Arkansas exempts the first $6,000 of “a traditional IRA distribution after reaching age fifty-nine and one-half (59 1/2)”, and the instructions also count distributions made on account of the participant’s death, but they do not say how a non-spouse beneficiary qualifies.
Arkansas at a glance
| Item | What the documents say |
|---|---|
| How the state taxes retirement-account income | Taxed as income with a $6,000 exemption for traditional IRA distributions |
| Do the state’s documents address beneficiaries? | Partly: death or disability distributions qualify and a surviving spouse qualifies; non-spouse beneficiaries are not described |
| Retirement exclusion or credit | The first $6,000 in total from all plans per taxpayer, for a traditional IRA distribution after age 59 1/2; death or disability distributions also qualify |
| Rate in the documents read | 3.9% marginal rate for 2025; 3.7% in the 2026 table under Act 2 |
| State inheritance or estate tax | Not mentioned in the documents read |
| Changed for 2026? | Act 2 of the First Extraordinary Session of 2026 sets new rate tables for tax years beginning on or after January 1, 2026 |
What the Arkansas documents say
The 2025 instructions say that if you received “a traditional IRA distribution after reaching age fifty-nine and one-half (59 1/2)”, then “the first $6,000 is exempt from tax”. The total exemptions from all plans cannot exceed $6,000 per taxpayer, not including recovery of cost.
On death, the instructions say “Premature distributions made on account of the participant’s death or disability” also qualify for the exemption. They add that “A surviving spouse qualifies for the exemption” but is limited to a single $6,000 exemption. A non-spouse beneficiary is not described.
The 2025 instructions print “Marginal Income Tax rates for 2025 are 3.9%”. Act 2 of the First Extraordinary Session of 2026 prints a 3.7% rate in its tables for tax years beginning on or after January 1, 2026.
The federal 10-year rule and your Arkansas tax year
IRS Publication 590-B says a beneficiary may be required to take the entire account balance by the “end of the 10th year following the year of the owner’s death”, with exceptions for certain beneficiaries. Because the balance generally has to come out within that window, the timing of each withdrawal decides which tax year it lands in. See the 10-year rule and annual RMDs, lump sum versus spreading withdrawals and inherited IRA rules.
Withholding and other state taxes
Whether a state withholds from a withdrawal is a separate rule: see state withholding on retirement withdrawals. For Arkansas’s own death taxes, see inheritance tax by state.
What the documents do not say
- The documents read do not describe how a non-spouse beneficiary of an inherited IRA uses the exemption, or whether the age 59 1/2 test looks to the owner or the beneficiary.
- They separately treat gifts and inheritances as exempt property, which is a different question from an IRA distribution.
- They say nothing about a deduction or credit for estate tax or income in respect of a decedent.
Common mistakes
- Assuming Arkansas’s rule for your own retirement income also covers an account you inherited: read whether its documents address beneficiaries, and confirm the point with a Arkansas preparer.
Related: state tax on inherited IRA withdrawals, state by state, whether Arkansas taxes 401(k) and IRA withdrawals, Arkansas retirement taxes, inheritance tax by state, inherited IRA rules, spouse versus non-spouse beneficiary rules, and state withholding on retirement withdrawals.
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Answer againSources
- 2025 Arkansas Individual Income Tax Forms and Instructions (AR1000F and AR1000NR): https://www.dfa.arkansas.gov/wp-content/uploads/2025_AR1000F_and_AR1000NR_Instructions.pdf
- Act 2 of the First Extraordinary Session of 2026 (SB1): https://www.arkleg.state.ar.us/Home/FTPDocument?path=%2FACTS%2F2026S1%2FPublic%2FACT2.pdf
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/pub/irs-pdf/p590b.pdf
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.