Moving to Bella Vista in Retirement? Watch Out for These Arkansas State Tax Rules

Arkansas has a graduated state income tax. As of the 2025 filing season, the state has income tax brackets that top out with a rate of about 3.9%. For tax year 2026, the state legislature passed SB1 reducing the top rate to 3.7%, which applies to taxable income above roughly $26,400. The income tax rates range from 0% on the first several thousand dollars of net income up through those higher brackets.

Arkansas taxes residents on all income-wages, interest, dividends, and most retirement account withdrawals-subject to specific exemptions and the standard deduction. Investment income, including capital gains and dividends, is taxed at the same rates as other income. However, Arkansas allows a 50% exclusion on net capital gains for state tax purposes, which is a meaningful benefit if you are selling appreciated investments or property.

If you are moving from a state like New Hampshire or South Dakota-where there is no broad-based personal income tax-any state income tax can feel like a new line item on your budget. Eight states have no personal income tax at all, and adjusting to even a moderate rate at the state level takes planning. Once Bella Vista becomes your primary home, you are generally considered an Arkansas tax resident, and your worldwide income comes under Arkansas's rules.

Here is the headline: Arkansas does not tax social security benefits. Not partially taxed, not phased out at higher incomes-just fully exempt. Arkansas exempts Social Security from state income tax regardless of your filing status or total income. For many retirees, social security retirement benefits are the largest single income source, and this exclusion is a real advantage.

Most other retirement income-traditional IRA distributions, 401(k) withdrawals, private pension income, and annuity payments-is generally taxable. But Arkansas offers a $6,000 per-taxpayer exemption on qualifying retirement benefits once you reach age 59½. For married couples filing jointly, each spouse may claim the exemption amount separately, potentially sheltering up to $12,000 of qualifying retirement income from Arkansas income tax each year.

A few things to understand about this pension exclusion:

• The $6,000 exemption is per taxpayer, not per account. Distributions from multiple pensions, IRAs, and retirement accounts all count toward that single limit.

• Early withdrawals taken before age 59½ generally do not qualify unless the distribution is due to death or disability.

• Retirement income above $6,000 is taxed at normal rates under Arkansas's standard brackets.

Timing withdrawals around age 59½ and coordinating pension start dates can meaningfully change your tax bill. If you are approaching retirement, mapping out a multi-year withdrawal strategy with a qualified advisor is worth doing before the moving truck arrives.

For retired service members, Arkansas is one of the friendlier states. Military retirement benefits-including survivor benefits-are fully exempt from Arkansas state income tax. This makes Bella Vista a compelling destination for career military families who want access to good healthcare, outdoor recreation, and a lower cost of living.

Here is where it gets nuanced. Under current law, the military retirement exemption interacts with the standard $6,000 retirement exemption. If your military retirement pay exceeds $6,000, you cannot also claim the general $6,000 exemption for other pension income or IRA distributions. If your military retirement pay is less than $6,000, you may be eligible to use the remaining portion of the exemption on other qualifying retirement income.

What does that mean in practice? A retired officer drawing $30,000 in military retirement pay is fully exempt on that income but cannot stack an additional $6,000 exemption for a civilian pension. Review your 1099-R statements with a tax-savvy advisor each year to make sure you are claiming the correct exemptions on your Arkansas return. Stacking federal benefits like TRICARE and VA disability with Arkansas's military retirement exemption can materially shift your net after-tax income in Bella Vista.

Arkansas averages a low effective property tax rate of around 0.56% to 0.70% of home value, which is well below the national median. Property taxes here are calculated by multiplying the assessed value (a percentage of market value) by local millage rates set by school districts, Benton County, and the city.

A few things to keep in mind:

• Benton County has higher median property tax bills than rural Arkansas counties, because home values in the Bella Vista area tend to be higher-especially for lakefront or golf-course properties.

• Bella Vista homeowners also pay POA assessments, which are not taxes but still show up in your annual housing budget. These fund lakes, trails, and community facilities.

• If you are moving from parts of New Jersey or Illinois, you will likely see a meaningful drop in your property tax. But do not assume the bill will be negligible if you are buying a higher-value home.

Before finalizing a purchase, ask the Benton County assessor's office or a local financial advisor to run an estimated property tax calculation on the specific home you are considering.

Arkansas offers two property tax protections that are especially valuable in retirement.

First, the homestead tax credit: Benton County offers a homestead property tax credit reducing tax liability by up to $675 per year on your primary residence. This credit applies to Bella Vista homeowners who file the appropriate paperwork with the county assessor.

Second, property taxes can be frozen for seniors age 65 and older under Arkansas law. Once granted, the taxable assessed value of your homestead generally stops increasing, helping stabilize your tax bill as long as you own and occupy the home. Millage rates can still change-so the freeze is on assessed value, not on the total bill-but it prevents your property's climbing market value from pushing your taxes higher every year.

Both benefits require you to apply with the Benton County assessor. They are not automatic for new Bella Vista residents. If you are turning 65 around the time of your move, coordinate the timing so you can claim the freeze as early as eligible.

Arkansas has relatively high sales taxes, and Bella Vista is no exception. The combined state and local sales tax rate in Bella Vista averages around 9.5%. If you are moving from a state with no local sales taxes or a lower local sales tax rate, this will add up fast-especially on large one-time purchases like furniture for a new home or a vehicle.

Groceries are taxed at a reduced state rate in Arkansas. Certain items like prescription drugs and durable medical equipment may be exempt or taxed differently. But most everyday purchases-home goods, dining, building materials-carry the full state and local rate.

For retirees planning big renovation projects in their first year, or those who simply spend more on discretionary purchases, including sales tax drag in your retirement budget is essential. Do not focus only on income taxes and property tax-your actual cash flow depends on the full picture.

Arkansas currently has no separate state estate tax and no inheritance tax. This is a meaningful benefit compared to other states that still impose an estate or inheritance tax at the state level.

However, larger estates may still be subject to federal taxes-specifically the federal estate tax-depending on the exemption in effect at the time of death. Income generated inside an estate or trust domiciled in Arkansas (interest, dividends, rental income) can be subject to Arkansas income taxes at fiduciary rates until distributed to beneficiaries.

Moving to Bella Vista does not eliminate estate planning issues. Retirees should update wills, powers of attorney, and beneficiary designations soon after establishing Arkansas residency. If you own property in other states or plan to leave assets to heirs outside Arkansas, coordinate with an advisor experienced in multi-state estate planning.

The value of a Bella Vista move depends heavily on where you are coming from and what kinds of income you have.

For those leaving high-tax states, the relief on income taxes and property taxes is often significant. For those leaving no-income-tax states, the introduction of a state tax on pensions and IRA distributions can sting-but the lower property taxes and total cost of housing in Bella Vista often offset this for many retirees. West Virginia will eliminate income tax on Social Security by 2026, joining most states that already exempt it, but still taxes other retirement income differently than Arkansas.

The mix of income sources matters. A retiree living primarily on social security income and modest investments may pay little or no Arkansas income tax. Someone with large pensions and hefty IRA distributions will feel the tax rate more directly. Running a detailed "before and after" projection is the only way to know your net financial impact.

Here is a practical checklist of mistakes we see new Bella Vista retirees make:

• Failing to update residency and withholdings. If you do not update your filing status, driver's license, and voter registration, you may pay income taxes in two states longer than necessary.

• Overlooking the $6,000 retirement income exemption. Some retirees simply do not claim it-or misallocate it across accounts and miss the benefit entirely.

• Confusing POA assessments with property tax. Bella Vista POA dues are not taxes. They do not appear on your county tax bill, but they are still a real cost of living here.

• Ignoring RMDs and bracket management. Required minimum distributions from retirement accounts can push you into higher income tax brackets. Coordinating RMDs with Arkansas's brackets can help smooth taxable income over time.

• Forgetting part-year filing. In the year you move, you may owe taxes to both Arkansas and your prior state. File as a part-year resident in each state, and check whether Arkansas offers a tax credit for taxes paid to other states.

In the first tax year after moving, have your return prepared or reviewed by a professional who knows Arkansas rules and multi-state filings.

Revolutionary Wealth is an Arkansas-based, fiduciary financial advisory firm that integrates retirement planning with tax strategy. We routinely work with clients ages 59–67 who are evaluating a move to Bella Vista or have recently relocated, helping them align investment withdrawals, pension options, and Social Security timing with Arkansas income tax rules.

Our engagements can include building multi-year tax projections, coordinating with CPAs, modeling different move dates, and comparing Arkansas's property tax and income tax landscape against your current state. We also help business owners who are selling or exiting a company in another state and then retiring to Bella Vista, coordinating potential capital gains with Arkansas and other states' tax rules.

If you are considering a move, a preliminary conversation may help you understand how these rules affect your net retirement income. No promises-just clarity on where you stand. Financial advisors who understand both sides of a state line can save you from learning the expensive way.

This blog contains general information that may not be suitable for everyone. The information contained herein should not be construed as personalized investment advice. There is no guarantee that the views and opinions expressed in this blog will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. Revolutionary Wealth LLC does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance. Past performance is no guarantee of future results.

Mutual Funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing in Mutual Funds. The prospectus, which contains this and other information about the investment company, can be obtained directly from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest. An investment in the Fund involves risk, including possible loss of principal.

Rebalancing/Reallocating can entail transaction costs and tax consequences that should be considered when determining a rebalancing/reallocation strategy.

A REIT is a security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate. There are risks associated with these types of investments and include but are not limited to the following: Typically no secondary market exists for the security listed above. Potential difficulty discerning between routine interest payments and principal repayment. Redemption price of a REIT may be worth more or less than the original price paid. Value of the shares in the trust will fluctuate with the portfolio of underlying real estate. Involves risks such as refinancing in the real estate industry, interest rates, availability of mortgage funds, operating expenses, cost of insurance, lease terminations, potential economic and regulatory changes. This is neither an offer to sell nor a solicitation or an offer to buy the securities described herein. The offering is made only by the Prospectus.

Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.

Converting an employer plan account or Traditional IRA to a Roth IRA is a taxable event. Increased taxable income from the Roth IRA conversion may have several consequences including but not limited to, a need for additional tax withholding or estimated tax payments, the loss of certain tax deductions and credits, and higher taxes on Social Security benefits and higher Medicare premiums. Be sure to consult with a qualified tax advisor before making any decisions regarding your IRA.

Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company. Surrender charges apply if not held to the end of the term. Withdrawals are taxed as ordinary income and, if taken prior to 59 ½, a 10% federal tax penalty. Investors are cautioned to carefully review an indexed annuity for its features, costs, risks, and how the variables are calculated.

Not associated with or endorsed by the Social Security Administration, Medicare or any other government agency. Maximizing your Social Security Benefits assumes foreknowledge of your date of death. If as an example you wait to claim a higher monthly benefit amount but predecease your average life expectancy, it would have been better to claim your benefits at an earlier age with reduced benefits.

Please consider the investment objectives, risks, charges, and expenses carefully before investing in Variable Annuities. The prospectus, which contains this and other information about the variable annuity contract and the underlying investment options, can be obtained from the insurance company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

The investment return and principal value of the variable annuity investment options are not guaranteed. Variable annuity sub-accounts fluctuate with changes in market conditions. The principal may be worth more or less than the original amount invested when the annuity is surrendered.

QLACs cannot be purchased with Roth or Inherited IRA dollars; value of such IRAs cannot be included in determining 25% premium limit. If Funding Source is Traditional IRA, 25% limit is calculated by combining the total value of all Traditional IRAs as of December 31st of the previous year. If Funding source is Employer sponsored qualified plan (401k, 403b and governmental 457b), 25% limit is calculated on an individual plan basis based on the plan's account value on the previous day's market close. If you previously purchased a QLAC, the calculation of your 25% limit is more complicated. Please contact an attorney or tax professional for additional details. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company.

The projections or other information generated by Monte Carlo analysis tools regarding the likelihood of various investment outcomes are hypothetical in nature, are based on assumptions that you provide which could prove to be inaccurate over time, do not reflect actual investment results, and are not guarantees of future results. Results may vary with each use and over time.