Consultants in Arkansas: taxes and retirement for 2026
For independent consultants and fractional executives billing clients directly in Arkansas. Arkansas has a graduated state income tax for 2026: 0% to 3.7% (top rate starts at $26,400 for single filers). Here are the 2026 rules, a worked example and the official sources.
Arkansas rules for consultants
- State income tax (2026)
- Arkansas has a graduated state income tax for 2026: 0% to 3.7% (top rate starts at $26,400 for single filers). HB 1001 of the 2026 First Extraordinary Session (Act 1, signed May 6, 2026) cut the top rate from 3.9% to 3.7% for tax years beginning on or after January 1, 2026. Standard table for 2026 (net taxable income up to $94,700): 0% up to $5,599, 2% from $5,600 to $11,199, 3% from $11,200 to $15,999, 3.4% from $16,000 to $26,399, and 3.7% from $26,400 to $94,700. Above $94,700, the upper table applies: 2% on the first $4,700 and 3.7% on the rest, with a bracket adjustment for income from $94,701 to $97,600.
- State estimated tax
- You must file a declaration of estimated tax if you can reasonably expect your Arkansas estimated tax to be more than $1,000. Farmers with at least two-thirds of gross income from farming have a special exception. Same dates as federal: April 15, June 15, and September 15, 2026, and January 15, 2027. Form AR1000ES.
- Arkansas LLC franchise tax
- Every LLC registered in Arkansas, including a single-member LLC, pays a flat $150 annual franchise tax, due by May 1. Unincorporated sole proprietors do not file this report.
- Empower Independent Contractors Act of 2019, as amended by Act 743 of 2025 (Ark. Code 11-1-201 et seq.)
- State agencies and employers must decide employee vs. independent contractor status for Arkansas labor law purposes using the IRS common-law factors in 26 C.F.R. 31.3121(d)-1 as of January 1, 2025. These factors include the right to control when, where, and how work is done, training, integration into the business, and set hours. Act 743 (April 17, 2025) replaced the earlier reference to the IRS 20-factor revenue ruling.
Federal rules for 2026
Solo 401(k) up to $72,000
A one-person consultancy can contribute a $24,500 employee deferral plus an employer share of about 20% of net self-employment earnings, up to $72,000 in 2026, plus an $8,000 catch-up at 50 or older ($11,250 at ages 60 to 63).
The S-corp trade-off
Electing S-corp status can cut payroll tax, but the salary you pay yourself also sets your Solo 401(k) room. Run both sides before you elect.
Quarterly estimated taxes
No one withholds tax from self-employment income, so you generally pay estimates four times a year if you expect to owe $1,000 or more. For 2026 income the federal dates are April 15, June 15 and September 15, 2026, and January 15, 2027. Paying 100% of last year's tax (110% if your AGI was over $150,000) in four equal installments avoids the underpayment penalty.
Self-employment tax
On top of income tax, self-employed people pay 15.3% on 92.35% of net profit: 12.4% Social Security up to the 2026 wage base of $184,500, plus 2.9% Medicare with no cap. Half of it is deductible.
A worked example
| Self-employment tax (sole proprietor) | $21,194 |
|---|---|
| Solo 401(k) maximum | $52,381 |
| SEP IRA maximum | $27,881 |
| Payroll tax saved as an S-corp on a $75,000 salary | $9,719 |
| Solo 401(k) maximum as that S-corp | $43,250 |
Federal figures only, before state and local taxes. Simplified: excludes the QBI deduction and the 0.9% Additional Medicare Tax. Computed from 2026 IRS limits (Notice 2025-67, Rev. Proc. 2025-32) and the SSA wage base.
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Questions
Do consultants in Arkansas pay state income tax?
Arkansas has a graduated state income tax for 2026: 0% to 3.7% (top rate starts at $26,400 for single filers). HB 1001 of the 2026 First Extraordinary Session (Act 1, signed May 6, 2026) cut the top rate from 3.9% to 3.7% for tax years beginning on or after January 1, 2026. Standard table for 2026 (net taxable income up to $94,700): 0% up to $5,599, 2% from $5,600 to $11,199, 3% from $11,200 to $15,999, 3.4% from $16,000 to $26,399, and 3.7% from $26,400 to $94,700. Above $94,700, the upper table applies: 2% on the first $4,700 and 3.7% on the rest, with a bracket adjustment for income from $94,701 to $97,600.
When are Arkansas estimated tax payments due for 2026?
You must file a declaration of estimated tax if you can reasonably expect your Arkansas estimated tax to be more than $1,000. Farmers with at least two-thirds of gross income from farming have a special exception. Same dates as federal: April 15, June 15, and September 15, 2026, and January 15, 2027. The state form is AR1000ES.
Are there other Arkansas taxes for self-employed consultants?
Arkansas LLC franchise tax: Every LLC registered in Arkansas, including a single-member LLC, pays a flat $150 annual franchise tax, due by May 1. Unincorporated sole proprietors do not file this report.
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Sources
- arkleg.state.ar.us/Home/FTPDocument?path=%2FACTS%2F2026S1%2FPublic%2FACT1.pdf
- www.dfa.arkansas.gov/wp-content/uploads/2026_Final_AR1000ES_1.pdf
- www.dol.gov/agencies/whd/state/minimum-wage/tipped
- www.sos.arkansas.gov/uploads/bcs/LLC1_FT_2026.pdf
- arkleg.state.ar.us/Home/FTPDocument?path=%2FACTS%2F2025R%2FPublic%2FACT743.pdf
State and local facts researched from official sources and independently re-checked; last verified October 2026, next scheduled review 2027-01-02. Educational information for 2026, not tax, legal or investment advice. Rules change; check the official sources listed and a tax professional for your situation. Gigaverse AI, Inc. is a financial technology company, not a bank, and not itself a registered investment adviser or broker-dealer.