How Much Are Property Taxes In Arkansas (2024)

Are you a business owner in Arkansas wondering about the burden of property taxes on your enterprise? Property taxes can be a significant concern for businesses, affecting your bottom line and overall financial health. Understanding the specifics of business property taxes in Arkansas is essential to navigate this financial obligation effectively. In this article, we will break down the key factors that determine the amount your business may owe in property taxes. By the end, you’ll have a clear understanding of the rules, regulations, and potential strategies to manage your business property taxes in the Natural State efficiently.

Table of content – How much are property taxes in Arkansas:

What are property taxes?
Why are property taxes important for businesses in Arkansas?
How much are property taxes in Arkansas?
How are property taxes calculated in Arkansas?
Different types of property taxes in Arkansas
Exemptions and deductions available for property taxes in Arkansas
How to pay property taxes in Arkansas
Tips for reducing your property tax bill in Arkansas

What are property taxes?

Property taxes are fees homeowners pay to local governments. They fund public services like schools, roads, and emergency services. Tax amounts depend on the property’s value and local tax rates. Assessors determine property values. Homeowners get a bill, usually annually. They must pay by a set deadline. Failure to pay can lead to penalties or even losing the property. Property taxes differ by location, so rates vary across cities and states. Some areas offer exemptions or deductions to lower taxes. Property taxes are a crucial revenue source for local governments, ensuring they can provide essential services to communities.

Why are property taxes important for businesses in Arkansas?

1. Supporting Local Infrastructure

Property taxes play a pivotal role in sustaining local infrastructure in Arkansas. These funds help maintain roads, bridges, schools, and other essential public services that businesses rely on daily. When businesses pay property taxes, they directly contribute to the upkeep and improvement of the local environment in which they operate. Well-maintained infrastructure enhances accessibility, making it easier for customers and employees to reach businesses, ultimately boosting economic activity.

2. Funding Education

A significant portion of property tax revenue in Arkansas goes towards funding education. Businesses benefit from a well-educated workforce, and property taxes ensure that schools have the resources needed to provide quality education. A strong education system produces skilled employees who can contribute to a company’s growth and competitiveness. Therefore, property taxes are a vital investment in the future workforce, ensuring businesses have access to a talented pool of individuals.

3. Promoting Economic Stability

Property taxes contribute to economic stability in Arkansas by providing a steady source of revenue for local governments. Unlike sales taxes, which can fluctuate with consumer spending, property taxes remain relatively stable, allowing municipalities to plan and budget effectively. This stability is particularly crucial during economic downturns when other revenue sources may decline. Businesses benefit from this stability as it helps maintain essential public services and avoids sudden tax increases that could impact their operations.

4. Maintaining Property Values

Property taxes are based on the assessed value of real estate, which includes business properties. When local governments use property tax revenue to invest in infrastructure and public services, it can enhance the overall quality of the area. This, in turn, can increase property values. For businesses, higher property values can be advantageous, as it can attract more customers and investors. Paying property taxes is not only an obligation but also a way to protect and potentially enhance the value of a business’s assets.

5. Balancing the Tax Burden

Property taxes help distribute the tax burden more equitably among businesses and residents. Unlike income taxes, which may disproportionately affect higher-income individuals, property taxes are based on property values. This means that businesses, regardless of their income level, contribute to the local tax base according to the value of their real estate. This equitable distribution of the tax burden ensures that all businesses, big and small, pay their fair share to support the community in which they operate.

How much are property taxes in Arkansas?

Arkansas has lower property taxes than most other states. The average effective property tax rate in Arkansas is 0.57%, which is the 16th-lowest in the U.S. This means that the average property owner in Arkansas pays $0.57 in property taxes for every $100 of assessed value. The amount of property tax you owe depends on the assessed value of your property, which is determined by the county assessor. The assessed value is typically lower than the market value of your property.

How are property taxes calculated in Arkansas?

What is assessed value?

In Arkansas, property taxes are determined based on the assessed value of the property. The assessed value represents the estimated market value of the property as determined by the county assessor’s office. This value is not the same as the property’s purchase price or market value; rather, it reflects the value assigned for tax purposes. It is important to note that the assessed value is used as the basis for calculating property taxes.

What is the millage rate?

The millage rate is a crucial factor in Arkansas property tax calculations. It is a tax rate expressed in “mills,” with one mill equal to one-tenth of a cent. The millage rate varies across different counties and is established by local taxing authorities, such as school districts, municipalities, and county governments. These entities set the millage rates to generate revenue for public services like schools, infrastructure, and local government operations. A higher millage rate results in a higher property tax bill for the homeowner.

How is the property tax bill calculated?

To calculate the property tax bill in Arkansas, you simply multiply the assessed value of your property by the applicable millage rate. For instance, if your property’s assessed value is $100,000, and the millage rate in your county is 40 mills, the calculation is as follows:

Property Tax = Assessed Value x Millage Rate

Property Tax = $100,000 x 0.040 (40 mills expressed as a decimal)

Property Tax = $4,000

In this example, the property tax bill for the year would amount to $4,000.

Example of how to calculate property taxes in Arkansas

Let’s consider an example with more specific figures. Suppose you own a home in Pulaski County with an assessed value of $150,000. The county sets a millage rate of 45 mills for local services. To determine your property tax bill, follow these steps:

Convert the millage rate to a decimal by dividing it by 1,000:

Millage Rate = 45 mills ÷ 1,000 = 0.045

Multiply the assessed value by the millage rate:

Property Tax = $150,000 x 0.045
Property Tax = $6,750

So, in this example, your property tax bill for the year in Pulaski County would amount to $6,750. It’s important to remember that property tax rates and assessed values can vary from county to county in Arkansas, so homeowners should check with their local assessor’s office or tax collector for precise information on their property tax obligations.

Different types of property taxes in Arkansas

Real Property Tax in Arkansas

Real property tax in Arkansas is a crucial source of revenue for local governments. It encompasses taxes levied on immovable assets like land, buildings, and homes. The tax rate varies by county and is based on the assessed value of the property. This assessment is typically conducted by the county assessor. Property owners are responsible for paying this tax annually, which contributes to funding local schools, infrastructure, and essential services.

Personal Property Tax in Arkansas

Arkansas also imposes a personal property tax, which includes taxes on movable assets such as vehicles, boats, and equipment. This tax applies to individuals and businesses. The assessed value of personal property determines the tax amount. County assessors play a vital role in evaluating the value of personal property. This tax revenue helps sustain county operations, ensuring the maintenance of public facilities and services.

Inventory Tax in Arkansas

Inventory tax in Arkansas is a unique taxation system applied to the inventory of businesses. This tax is assessed on the value of a business’s tangible personal property, including goods held for sale. Each county sets its inventory tax rate, and the tax contributes significantly to local government revenue. Businesses must regularly report their inventory to assessors for accurate valuation. The revenue generated from inventory tax aids in supporting various county initiatives and services.

Equipment Tax in Arkansas

Equipment tax in Arkansas pertains to the taxation of machinery and equipment used by businesses. It encompasses items like manufacturing machinery, office equipment, and tools. The assessed value of this equipment determines the tax amount, with the rate varying among counties. Assessors evaluate the value of equipment regularly. Revenue from equipment tax is essential for local governments to improve infrastructure and invest in economic development projects.

Exemptions and deductions available for property taxes in Arkansas

Homestead Exemption

In Arkansas, the Homestead Exemption is a valuable benefit for homeowners. This exemption allows eligible homeowners to reduce the assessed value of their primary residence by $350. To qualify, one must be a resident of Arkansas and own and occupy the home as their principal place of residence as of January 1st of the assessment year. This exemption provides relief by lowering property tax bills, making homeownership more affordable for many Arkansans.

Agricultural Exemption

For those engaged in agriculture, Arkansas offers an Agricultural Exemption to alleviate property tax burdens. This exemption is available to individuals who use their land for agricultural purposes. It permits a substantial reduction in the assessed value of agricultural land, leading to lower property tax obligations. Eligible agricultural activities encompass crop cultivation, livestock raising, and timber production. By promoting agriculture, this exemption encourages economic growth in rural areas of the state.

Charitable Exemption

Non-profit organizations operating in Arkansas can benefit from the Charitable Exemption, which exempts their property from property taxes. To qualify, an organization must be registered as a non-profit and demonstrate that its property is used primarily for charitable, religious, educational, or scientific purposes. This exemption supports the vital work of charitable organizations by allowing them to allocate more resources to their missions instead of property taxes. It plays a pivotal role in fostering community welfare and social development.

Other Exemptions and Deductions

Apart from the aforementioned exemptions, Arkansas provides various other exemptions and deductions tailored to specific circumstances. These include exemptions for disabled veterans, seniors, and surviving spouses of military personnel. Disabled veterans with a 100% service-connected disability can receive a complete property tax exemption, while seniors aged 65 or older may qualify for a tax freeze, preventing their property tax from increasing due to assessment value hikes. Surviving spouses of military personnel who died in the line of duty can also benefit from property tax exemptions in Arkansas.

How to pay property taxes in Arkansas

When Are Property Taxes Due?

Property taxes in Arkansas are typically due on October 15th of each year. This due date is consistent across the state and applies to both real and personal property. Property owners need to mark this date on their calendars and ensure they make timely payments to avoid penalties and interest charges.

Where to Pay Property Taxes

Arkansas provides several convenient options for property owners to pay their property taxes:

County Tax Collector’s Office: The primary and most traditional method to pay property taxes in Arkansas is by visiting your local County Tax Collector’s Office. These offices are usually located within your county seat and are responsible for collecting property taxes. Property owners can make payments in person during regular office hours. You can find the contact information and office hours for your County Tax Collector’s Office on the official website of your county government.

Online Payments: Many counties in Arkansas offer online payment options for property taxes. This method provides convenience as property owners can pay their taxes from the comfort of their homes. To use this service, you will need your property tax statement or assessment number, which can be found on your tax bill. Payment can usually be made using credit cards, debit cards, or electronic checks. Be sure to visit your county’s official website for information on how to access and use the online payment system.

Mail-In Payments: Property owners can also choose to mail their property tax payments to the County Tax Collector’s Office. To do this, simply follow the instructions on your property tax bill. Typically, you will need to make a check or money order payable to the County Tax Collector and include your property tax statement or assessment number on the payment. It’s essential to mail your payment well in advance of the October 15th deadline to ensure it arrives on time.

Payment Drop Boxes: Some County Tax Collector’s Offices offer secure payment drop boxes for property owners who prefer not to pay in person but also do not want to mail their payments. These drop boxes are typically available outside the office and can be used to deposit your payment, along with the necessary documentation. Make sure to verify the location and availability of drop boxes with your local tax collector.

How to Pay Property Taxes

To pay your property taxes in Arkansas, follow these simple steps:

Gather Your Information: Before making a payment, gather all the necessary information, including your property tax statement or assessment number and the amount you owe. Ensure you have the correct information to avoid payment errors.

Choose Your Payment Method: Decide how you want to make your payment. You can visit the County Tax Collector’s Office in person, pay online through your county’s official website, or send a payment by mail.

Make the Payment: Depending on your chosen payment method:

For in-person payments, visit your County Tax Collector’s Office during their regular business hours. Present your property tax statement and make your payment using cash, check, or credit/debit card, as accepted.
For online payments, access your county’s official website and follow the instructions for making property tax payments. Enter the required information, including your property tax statement number and payment details.
For mail-in payments, prepare a check or money order payable to the County Tax Collector and include your property tax statement or assessment number. Mail it to the address specified on your tax bill, ensuring it reaches the office well before the October 15th deadline.

Keep Records: After making your payment, retain copies of all documentation, including receipts, confirmation emails, or canceled checks. These records are essential for your financial records and may be necessary for future reference.

By following these simple steps and staying informed about your property tax due date, you can easily and efficiently pay your property taxes in Arkansas, ensuring you meet your obligations and avoid penalties. Whether you prefer in-person payments, online convenience, or traditional mail-in methods, Arkansas offers various options to suit your preferences.

Tips for reducing your property tax bill in Arkansas

1. Appeal Your Property’s Assessed Value

To reduce your business property tax bill in Arkansas, start by appealing your property’s assessed value. The assessed value determines the amount of property tax you owe. If you believe the assessment is too high, you have the right to appeal. Gather evidence such as recent property appraisals, comparable property values, and any physical changes to your property that may affect its value. Present your case to the local county assessor’s office, and if successful, your property’s assessed value may be lowered, leading to a reduced tax bill.

2. Claim All Available Exemptions and Deductions

Ensure you claim all available exemptions and deductions to lower your business property tax liability. In Arkansas, various exemptions and deductions may apply to your property, such as the Freeport exemption for qualified inventory or the homestead exemption for certain residential properties. Review the Arkansas Department of Finance and Administration’s guidelines to identify eligible exemptions and deductions for your business property. Filing for these exemptions and deductions can significantly decrease your property tax bill.

3. Prepay Your Property Taxes

Consider prepaying your property taxes as a strategic move to reduce your overall tax burden. In Arkansas, you can usually prepay property taxes before the tax assessment date, which is typically October 10th. By doing so, you may benefit from discounts or early payment incentives offered by local authorities. Prepayment allows you to lock in lower rates and potentially reduce your property tax bill for the upcoming year. However, make sure to consult with your local tax assessor’s office for specific prepayment details and deadlines.

4. Consider a Property Tax Protest

If you believe your property tax assessment is unjust, consider initiating a property tax protest. This involves formally challenging your property’s assessed value or classification. First, contact your county assessor’s office to discuss your concerns and seek resolution. If unresolved, you can proceed to a formal protest. Attend the local county board of equalization hearing and present evidence supporting your claim for a reduced assessment. Be prepared to provide documentation, such as appraisals and comparative property values, to bolster your case. A successful property tax protest can result in a lowered assessed value and, consequently, reduced property taxes.

Conclusion

In conclusion, understanding business property taxes in Arkansas is essential for entrepreneurs and property owners. The tax rates are determined by the assessed value of the property and can vary by location. Business owners should be aware of these rates to plan their finances effectively. Additionally, exemptions and credits are available, offering opportunities to reduce tax burdens. Staying informed about local tax regulations and seeking professional advice when needed can lead to significant savings for businesses. It’s crucial to factor in property taxes when making financial decisions in Arkansas, ensuring a smooth and prosperous operation while complying with tax obligations.