Arkansas Hourly Paycheck Calculator
Living in Arkansas means you’re no stranger to tornadoes. They sweep through quickly and with severe consequences. Although payroll taxes don’t usually surprise you like tornadoes, they can wreak havoc if you’re unprepared.
After reading this guide on Arkansas payroll taxes and paycheck rules, you’ll be ready to weather the payroll storm.
Arkansas state payroll taxes
Arkansas withholding tax
When employees begin working for you, have them complete Form AR4EC, Employee’s Withholding Exemption Certificate. Here, they’ll let you know the number of exemptions they’re claiming, which you’ll use to figure out how much tax to take out.
Using information from Form AR4EC and tax tables or payroll software, you can calculate how much withholding tax is required.
There are exceptions to the withholding rules, most notably for Texarkana residents, a city split between Texas and Arkansas.
For residents living in the Arkansas side of Texarkana, all of their income is exempt from Arkansas income tax. And for residents living on the Texas side and earning wages on the Arkansas side, their Arkansas wages are exempt from Arkansas income tax.
If you have Texarkana employees, they’ll need to complete Form AR4EC(TX), Texarkana Employee’s Withholding Exemption Certificate.
Paying Arkansas withholding tax
You’ll pay Arkansas withholding tax either monthly or annually. All new employers are classified as monthly filers unless notified by the Commissioner of Revenue.
Monthly filers will use Form AR941M, Monthly Wage Withholding Report, to report wages and the amount of tax due. This report and payment must be made before the 15th day following the end of the month. And a zero payment report is required for months with no taxes withheld.
Annual reconciliation reports are due from all employers using Form AR3MAR, Employer’s Annual Reconciliation of Income Tax Withheld. Send along copies of your Form W-2 for all employees before February 28.
Check out Arkansas’s Department of Finance and Administration’s helpful withholding tax guide for more information.
Arkansas unemployment tax
The Division of Workforce Services administers the unemployment insurance program in Arkansas. This program assists workers who are unemployed through no fault of their own.
Arkansas employers pay unemployment tax at rates ranging from 0.1% to 5.0%, plus the stabilization rate in effect for the current year. If you’re a new business, then you’ll pay a 3.2% rate for the first three full years.
The wage base in Arkansas is $10,000. That means you’ll pay tax only on the first $10,000 of each employee’s wages each year.
You’ll need to pay the tax and file quarterly wage reports whether or not wages are paid. Reports can be filed electronically or with paper reports using Form DWS-ARK-209B, Employer’s Quarterly Contribution and Wage Report. If you have at least 250 employees, you are required to file your reports electronically.
Other Arkansas paycheck rules
- New hire reporting – Employers need to report all newly hired or rehired employees to the Arkansas New Hire Reporting Center within 20 days of their hire date.
- Minimum wage – Minimum wage in Arkansas is $11.00 per hour as of January 1, 2022.
- Overtime – Overtime pay of at least 1 ½ times the hourly rate is required when hourly employees work more than 40 hours per week.
- Final paychecks – Arkansas doesn’t have a law that specifically states when final wages are due.
- Voting leave – Arkansas employers need to allow employees to vote on election days. If that means an employee must take time off, the employer must give the leave, but it doesn’t need to be paid.
Workers’ Compensation insurance – Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.
Federal payroll taxes in Arkansas
Arkansas employers also need to collect federal payroll taxes.
There are four federal payroll taxes to be mindful of.
|Federal Payroll Taxes|
FIT – Federal income tax
Just like you’ll need to withhold Arkansas income tax from workers’ pay, you’ll need to do the same for federal income taxes.
To figure out how much tax to take out, you’ll need to get Form W-4, Employee’s Withholding Certificate, from each employee when they start working for you. Although a new form isn’t required each year, it’s good practice to have employees review it each year for changes.
Using information from Form W-4 and federal tax tables or payroll software, you’ll be able to calculate how much tax to withhold.
Additional Medicare tax
The Additional Medicare tax is part of the 2013 Affordable Care Act, and it applies to some employees earning wages over $200,000. As an employer, you’ll withhold 0.9% of all wages over $200,000 for the Additional Medicare tax.
FUTA – Federal unemployment tax
Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but most employers only have to pay 0.6% each year.
FICA – Federal Insurance Contributions Act
The Federal Insurance Contributions Act, or FICA tax, is made up of the Medicare tax and the Social Security tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
|Social Security tax||6.2% on the first $147,0000 of wages in 2022|
|Medicare tax||1.45% on all wages|
Paying federal income taxes
FIT, FICA, and Additional Medicare tax are usually paid monthly or semi-weekly depending on how much tax you owe. But, employers with large dollar payrolls may need to make next business day payments.
No matter how frequently you pay, you’ll need to submit quarterly payroll tax returns using Form 941, Employer’s Quarterly Federal Tax Return, to reconcile the amount of tax that you owe with the amount of tax you already paid.
FUTA is most frequently paid annually. But if you owe more than $500, you’ll need to make quarterly payments. And each time you make a payment, you’ll send the IRS Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.
Be sure to pay your taxes on time and don’t file your reports late. A comprehensive payroll provider can take care of this to ensure you don’t miss a deadline.
Now that you’re up to speed on Arkansas payroll taxes and paycheck rules, you’re ready to pay your workers. You can use Gusto’s Arkansas Hourly Paycheck Calculator to help you calculate your payroll taxes.