How does Arkansas tax capital gains?

Arkansas taxes capital gains as ordinary income but allows a 50% exclusion on net long-term capital gains. Only half of a long-term gain is subject to Arkansas income tax at the state's top rate of 4.4% for 2024. Short-term gains are fully taxed.

What is the federal capital gains tax rate?

Short-term gains (assets held one year or less) are taxed at ordinary federal income rates. Long-term gains are taxed at 0%, 15%, or 20% depending on your taxable income — 0% for lower incomes, 15% in the middle, and 20% for high earners.

Does Arkansas's 50% exclusion apply to short-term gains?

No. The 50% capital gains exclusion applies only to net long-term capital gains. Short-term gains are taxed in full as ordinary income at Arkansas's regular rates, the same as wages or interest.

Is there a special rule for very large gains in Arkansas?

Yes. Arkansas excludes 100% of the portion of net long-term capital gains exceeding $10 million. Below that threshold, the standard 50% exclusion applies. This calculator models the 50% exclusion for typical gains.

Is the 3.8% net investment income tax included?

This simplified tool focuses on the regular federal long-term rate and Arkansas state tax. The federal 3.8% net investment income tax can apply to high earners above income thresholds and would add to the federal amount shown.

Arkansas Capital Gains Tax Calculator

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Selling an appreciated asset can trigger both federal and Arkansas tax. This calculator applies the right federal rate for short- or long-term gains and Arkansas’s 50 percent exclusion on long-term gains to estimate your combined bill.

How it works

Short-term gains (held one year or less) are taxed as ordinary income federally and fully at Arkansas’s rate. Long-term gains use preferential federal rates and a state exclusion:

Federal LTCG rate = 0% / 15% / 20% based on taxable income
Arkansas LTCG     = (gain × 50% taxable) × 4.4%
Arkansas STCG     = gain × 4.4% (no exclusion)

Arkansas taxes only half of a net long-term gain, so the effective state rate on long-term gains is about 2.2 percent.

Example

A $40,000 long-term gain for a middle-income filer is taxed federally at 15% = $6,000. Arkansas taxes half ($20,000) at 4.4% = $880. The combined tax is about $6,880 — an effective rate near 17.2 percent on the gain.

Notes

This tool uses simplified 2024 federal long-term brackets and Arkansas’s top 4.4 percent rate with the 50 percent exclusion. It does not model the 3.8 percent net investment income tax, the 100 percent exclusion above $10 million, capital losses, or the exact federal bracket stacking with ordinary income. Verify with a tax professional, irs.gov, and dfa.arkansas.gov.