Updated October 5, 2026. Quick answer: Yes. Arkansas taxes trust income through the fiduciary return, Form AR1002F, and the Code of Arkansas Rules says that return “is used to report the income of an estate or trust”. The 2025 regular tax table tops out at 3.9% and the 2026 table at 3.7%.
How Arkansas treats trust income
| Item | What the documents say |
|---|---|
| Treatment | Arkansas taxes the income of trusts and estates through the fiduciary return, and the state rule says a fiduciary return (AR1002F) “is used to report the income of an estate or trust” for residents, with Form AR1002NR as the nonresident version. |
| Who counts as a resident trust | The Department rule does not define a resident trust directly, but it says income received by an estate or trust is attributable to Arkansas when the “trustee, administrator, executor, or personal representative is a resident of Arkansas” and also when the estate or trust is physically located within Arkansas. |
| Rate on trust income | Act 2 of the 2026 First Extraordinary Session amended Arkansas Code 26-51-201 so that for tax years beginning on or after January 1, 2026, a table with a top rate of 3.7% applies to trusts and estates with net income at or below $94,700, and a table with 2% on the first $4,700 and 3.7% above applies to higher net income. The Act covers “Every resident, individual, trust, or estate having” net income within each table, and the 2025 regular tax table printed by the Department tops out at 3.9%. |
| Distribution deduction | The AR1002F return has a line for amounts to be distributed to beneficiaries that is subtracted from adjusted income, and the instructions for line 18 say to “Enter the total amount of income or loss to be” distributed to all beneficiaries during the year, so income passed to beneficiaries is taxed on Schedule B to them rather than to the trust. |
| Nonresident trusts | Nonresident fiduciaries file Form AR1002NR, which apportions tax by an Arkansas percentage computed from the Arkansas income amount and the all income amount on the return, and the tax is then multiplied by that percentage. |
| Return to file | The instructions cover AR1002F and AR1002NR, and the Department rule lists when a return is required, starting when “Any income of such estate or trust is currently distributable” and also when the tax is payable by the beneficiaries or the grantor, when net income is $3,000 or over, or when any beneficiary is a nonresident. |
| Electing small business trusts | An electing small business trust reports the S corporation portion separately, and the instructions for line 26A of the AR1002F say to “Enter the net tax from the S portion of the ESBT” on a schedule attached to the return. |
| Limited exemption for resident fiduciaries | The Department rule cites Arkansas Code 26-51-201(b) and (c) and states that “a limited exemption from Arkansas income tax has been established” for resident fiduciaries when the trust or estate was created by a nonresident individual or the beneficiary of a trust is a nonresident. |
A $10,000 example
The tax on $10,000 of taxable income a trust keeps depends on the bracket it lands in. Taxed wholly at the lowest printed rate, 2%, the tax is computed as $10,000 x 2% = $200; taxed wholly at the highest, 3.7%, it is computed as $10,000 x 3.7% = $370. The state’s own schedule decides which applies. Federal tax on the trust’s income still applies.
Income the trust passes out to a beneficiary is handled as the distribution deduction row above describes.
What changes in 2026
Act 2 of the 2026 First Extraordinary Session, approved 5/6/26, amends Arkansas Code 26-51-201 so the top rate on individuals, trusts and estates is 3.7% for tax years beginning on or after January 1, 2026.
Federal rules
The state’s treatment sits on top of the federal one. The federal brackets a trust faces are laid out in trust tax brackets versus individual brackets, and capital gains that a trust keeps are covered in capital gains stay in the trust. The IRS explains the federal return in the About Form 1041 page.
Related: how Arkansas taxes retirement income, whether Arkansas taxes pensions, what a living trust costs in Arkansas, federal trust tax brackets, and trust income tax by state.
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Answer againSources
- Arkansas Fiduciary Income Tax Instructions AR1002F and AR1002NR, 2025 (Arkansas Department of Finance and Administration): https://www.dfa.arkansas.gov/wp-content/uploads/FiduciaryTaxInstructions_2025.pdf
- 26 CAR 100-145, Fiduciary returns, Code of Arkansas Rules (Arkansas Department of Finance and Administration): codeofarrules.arkansas.gov
- Act 2 of the First Extraordinary Session of 2026, amending Arkansas Code 26-51-201 (Arkansas General Assembly): https://www.arkleg.state.ar.us/Home/FTPDocument?path=/ACTS/2026S1/Public/ACT2.pdf
- 2025 Tax Tables (Arkansas Department of Finance and Administration): https://www.dfa.arkansas.gov/wp-content/uploads/TaxTables_FI_2025.pdf
- 2025 AR1002F Arkansas Fiduciary Income Tax Return (Arkansas Department of Finance and Administration): https://www.dfa.arkansas.gov/wp-content/uploads/AR1002F_FI_2025_1.pdf
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.