Arkansas Salary Paycheck Calculator
Arkansas is a great state to start a business. Just ask the large retailer with a name starting with the letter W. Even if your business isn’t striving to be the next big-box international superstar, you still need to know the ins and outs of payroll taxes.
We know payroll taxes aren’t as enjoyable as boating in the Ozarks. So Gusto created the Arkansas Salary Paycheck Calculator and answered the most frequently asked questions about Arkansas’s payroll taxes.
Arkansas state payroll taxes
How is unemployment tax calculated in Arkansas?
Rates for Arkansas unemployment tax vary and range between 0.1% to 5.0%. A stabilization rate that changes each year is added to come up with your total tax rate. For new businesses, for the first three years, you’ll pay a 3.2% rate.
In Arkansas, unemployment tax is only charged on the first $10,000 of each worker’s wage each year. You’ll calculate the amount of tax you owe each quarter and pay it to the Division of Workforce Services. Quarterly reports are required even for quarters when no wages were paid.
Employers with 250 employees or more must file their reports electronically. All other employers are encouraged to file online but using Form DWS-ARK-209B, Employer’s Quarterly Contribution and Wage Report, is allowed.
How much withholding tax do employers take out of employees’ paychecks in Arkansas?
The amount of tax employees have deducted from their paychecks depends largely on Form AR4EC, Employee’s Withholding Exemption Certificate. This form is the Arkansas equivalent of the federal Form W-4, Employee’s Withholding Certificate, and both should be completed when hired.
Employers can use Form AR4EC and tax withholding tables to manually find out how much tax to withhold. Alternatively, payroll software makes it easier and faster to calculate withholding tax with just a few clicks.
If you have employees living in Texarkana, Arkansas or Texas, you’ll need to know that their wages are exempt from Arkansas withholding tax. Have them complete Form AR4EC(TX), Texarkana Employee’s Withholding Exemption Certificate, to certify that they live within the city’s limits.
When is withholding tax due in Arkansas?
Employers pay withholding tax monthly unless notified by the Department of Finance and Administration to file annually.
Employers use Form AR941M, Monthly Wage Withholding Report, to file their monthly payroll tax returns. Returns are due no later than the 14th of the month for the previous month, even for months when no taxes were withheld.
Annual summary reports are required from all employers. You’ll file Form AR3MAR, Employer’s Annual Reconciliation of Income Tax Withheld, and send copies of Form W-2 for all employees before February 28.
What’s the salary threshold in Arkansas?
Arkansas does not have a state salary threshold so the federal threshold is used. The federal salary threshold is now $684 per week (equivalent to $35,568 per year for a full-year worker). The Department of Labor permits employers to count some bonuses, commissions, and other incentive payments toward meeting the standard salary level (up to 10%). Employees who earn at least $107,432 per year may qualify as “highly compensated.” See this Department of Labor fact sheet for details.
Do new hires need to be reported in Arkansas?
Yes, they do. Employers have 20 days to report all new and rehired employees to the Arkansas New Hire Reporting Center.
When is Workers’ Compensation insurance required in Arkansas?
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.
When employees leave, when do final paychecks need to be paid?
Although Arkansas has no state law dictating when final paychecks need to be given, best practices would be to provide final wages no later than the next regularly scheduled payday.
Does Arkansas require employers to provide paid time off?
Arkansas employers aren’t required to provide paid time off. However, they may be required to allow employees unpaid time off to vote.
Federal payroll taxes in Arkansas
How do employers know how much federal income tax to take out of employees’ paychecks?
Have employees complete Form W-4, Employee’s Withholding Certificate, on their first day. Information on this form will help you calculate the amount of federal income tax to withhold from workers’ paychecks.
With the Form W-4 information, you can use the federal withholding tax tables or payroll software to make the calculations.
When you’ve finished inputting your employees’ Form W-4 information, file it away in your payroll records. Don’t send it to the IRS.
How is FICA tax calculated?
FICA tax is made up of the Social Security tax and the Medicare tax. It’s broken down as follows:
| FICA Tax | ||
| Employer pays | Employee pays | |
| Social Security tax | 6.2% on the first $147,000 of wages in 2022 | 6.2% on the first $147,000 of wages in 2022 |
| Medicare tax | 1.45% on all wages | 1.45% on all wages |
| Total | 7.65% | 7.65% |
What is the Additional Medicare tax?
The Affordable Care Act created an additional Medicare tax to be paid by certain employees.
Employees earning more than $200,000 per year need to have the Additional Medicare tax deducted from their wages. The rate is 0.9% on wages over $200,000.
Do employers need to pay federal unemployment tax if they pay Arkansas unemployment tax?
Yes, 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.
When are federal payroll taxes due?
Federal unemployment tax is generally paid annually. But quarterly payments are required when you owe $500 or more. And you’ll file Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, with the IRS each time you make payment.
FICA, Additional Medicare tax, and federal withholding tax are paid monthly or semi-weekly for most employers. But some large employers may be required to pay the next day. Regardless of your payment schedule, you’ll file quarterly summary reports on Form 941, Employer’s Quarterly Federal Tax Return.
You won’t have to worry about filing and payment deadlines when you use comprehensive payroll providers. This frees up your time to focus on growing your business.
Disclaimer
The information provided by the Employer Tax Calculator is for general information and estimation. All of the taxes or fees that apply to your business may not be accounted for, or fully up to date. Gusto, Inc. (dba “Gusto”) does not promise or guarantee that the information in the Employer Tax Calculator is accurate or complete, and Gusto expressly disclaims all liability, loss or risk incurred by employers or employees as a direct result or an indirect consequence of its use. By using the Employer Tax Calculator, you waive any rights or claims you may have against Gusto in connection with its use.