# Arkansas Legislature Reduces Income Tax Rates

The Arkansas Legislature has enacted significant income tax reductions through HB1001 and SB1, lowering the top individual income tax rate to 3.7% effective January 1, 2026, and the top corporate income tax rate to 4.1% effective January 1, 2027. These tax cuts are projected to reduce state general revenue by approximately $191.8 million in fiscal year 2027 and $144.8 million in fiscal year 2028. This reduction in revenue may impact state-funded procurement budgets and contracting opportunities, requiring procurement professionals and contractors to anticipate potential adjustments in funding availability and contract awards within Arkansas state agencies.

- Procurement officials should evaluate upcoming budget cycles for possible constraints or reprioritization due to decreased state revenue.
- Contractors serving Arkansas state agencies may experience changes in procurement volume or timing and should plan accordingly.
- Agencies might seek cost efficiencies or alternative funding mechanisms to maintain service levels amid reduced tax revenue.
- Businesses should consider the broader economic impact of tax changes on state procurement demand and adjust business development strategies in Arkansas accordingly.

**Jurisdictions:** sled
**Industries:** Professional Services
**Topics:** Grants & Funding
**Published:** May 09, 2026

### Government Entities
- Arkansas House of Representatives
- House Revenue and Taxation Committee
- Arkansas Senate
- Office of the Governor of Arkansas

### Sources
- [Daily Summary for Tuesday, May 5, 2026  - Arkansas House of Representatives](https://www.arkansashouse.org/news/post/35260/daily-summary-for-tuesday-may-5-2026) - AR
- [Tax Cuts Passed in Special Session - Arkansas House of Representatives](https://www.arkansashouse.org/news/post/35262/tax-cuts-passed-in-special-session) - AR