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
| Item | What the documents say |
|---|---|
| How the state treats 403(b) and 457(b) withdrawals | The 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 credit | Exemption of the first $6,000 per taxpayer from employment-related retirement systems, plans or programs |
| Public-employee pension rule | Yes, public employment-related systems are included in the exemption |
| Rate in the documents read | 3.9% 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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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 Tax Topic 410, Pensions and annuities: https://www.irs.gov/taxtopics/tc410
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.