Updated September 4, 2026. Quick answer: Partially. Arkansas exempts the first $6,000 of combined pension and retirement-account income per taxpayer, regardless of whether it came from a public or private employer. Military retirement pay is fully exempt, separate from that $6,000 cap.
More on public pension systems, topic by topic: Arkansas LOPFI service credit purchase, Arkansas LOPFI DROP and Arkansas LOPFI return to work after retirement.
More state retirement-income schedules, line by line: Arkansas AR1000F retirement exemptions.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Arkansas tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Arkansas tax 403(b) and 457(b) withdrawals.
The local police and fire system (LOPFI), with its options and DROP rules from its own handbook: Arkansas LOPFI retirement decisions.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Arkansas tax withholding on pension payments.
Selling your home? How the state taxes the profit, from its own tax documents: Does Arkansas tax the profit from selling your home?.
The state’s income tax schedule: the Arkansas tax brackets for 2026.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Arkansas tax withholding on IRA and 401(k) withdrawals.
Taking money out of your TSP? How the state taxes it, from its own tax documents: Does Arkansas tax TSP withdrawals?.
Trusts have their own page: does Arkansas tax trust income.
Dividends and interest have their own page: does Arkansas tax dividends and interest.
Annuity payments have their own page: does Arkansas tax annuity income.
Making a gift or planning an estate? The state’s gift tax answer, from its own tax documents: Does Arkansas have a gift tax?.
Planning for what you leave behind? The state’s estate tax answer, from its own tax documents: Does Arkansas have an estate tax?.
Military retired pay has its own page: does Arkansas tax military retirement.
Saving for a child’s college? The state’s 529 break has its own page: Arkansas 529 plan tax deduction.
Selling stocks, funds or real estate has its own page: does Arkansas tax capital gains.
Withdrawals from a 401(k) or IRA have their own page: does Arkansas tax 401(k) and IRA withdrawals.
The ATRS options, T-DROP and refund rules, from the system’s own handbook: Arkansas ATRS retirement decisions.
The APERS options, DROP and partial annuity withdrawal, from the system’s own handbook: Arkansas APERS retirement decisions.
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Arkansas taxes retirement income generally.
The rule in the source’s own words. Arkansas Department of Finance and Administration, 2025 AR1000F instructions: “that is not exempt under IRC §104, the first $6,000 is exempt from tax.” (source, read October 5, 2026). This page’s governing citation: A.C.A. sec. 26-51-307.
A worked example. Take $40,000 of pension and retirement-account income. The first $6,000 is exempt, so $34,000 stays in Arkansas taxable income before deductions (the $6,000 is the 2025 instructions’ figure and applies per taxpayer).
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Partially exempt, first $6,000 of combined retirement income per taxpayer (shared with private pensions and IRA/401(k) below, not a separate $6,000). |
|---|---|
| Private (employer) pensions | Same $6,000 combined exclusion as public pensions; the statute does not distinguish by funding source. |
| Federal government pensions (FERS/CSRS) | Generic “public or private… regardless of the method of funding” language implies federal pensions share the same $6,000 exclusion, though no source names federal pensions specifically. |
| Military retirement pay | Fully exempt since tax year 2018 (Act 141 of 2017), separate from the general $6,000 cap. |
| IRA and 401(k)/403(b) distributions | Shares the same combined $6,000 cap as any pension exemption (not additive); traditional IRA distributions must be after age 59 1/2 or due to death or disability to qualify. |
| General retirement-income exclusion | A $29 per-taxpayer “65 Special” tax credit for filers 65 or older who do not claim the $6,000 retirement exemption (mutually exclusive with it, not additive). |
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Social Security is never taxed by Arkansas. Social Security has its own rules in every state; see the full breakdown in how Arkansas taxes retirement income generally.
Figures verified against the Arkansas DFA 2025 AR1000F/AR1000NR Instructions; A.C.A. sec. 26-51-307 could not be re-read this session and was not re-checked on September 30, 2026.
Statute and sources
Governing citation: A.C.A. sec. 26-51-307.
- Arkansas Dept. of Finance and Administration, 2025 AR1000F/AR1000NR Instructions
- A.C.A. § 26-51-307, subsection (a)(1) is where the “public or private… regardless of the method of funding” language quoted above actually appears; the AR1000F instructions state the same rule in their own words (“The method of funding is irrelevant”)
Read September 4, 2026; the governing statute read at source September 6, 2026.
Related: how Arkansas taxes retirement income generally · does Arkansas tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.