Managing sales tax in Arkansas doesn’t have to feel overwhelming. Whether you run a small boutique in Bentonville or a bustling restaurant in Little Rock, understanding how the state’s sales and use tax works is key to staying compliant and avoiding unnecessary headaches. Arkansas has a layered tax system, meaning businesses collect a state rate plus any local city and county taxes. Once you get familiar with the structure, it becomes much easier to track what you owe and keep your reporting on schedule.
This guide breaks down the essentials so you know exactly what to collect, how much to charge, and what to expect when it’s time to file.
What is Arkansas sales tax rate?
Arkansas has a statewide sales tax rate of 6.5%. However, like many states, local governments can tack on their own taxes. Cities and counties across Arkansas may add anywhere from 1% to 5.125%, depending on the area.
That means your customers’ total sales tax rate will vary based on your business location or where the sale is delivered. For example, a shopper in Little Rock may pay a different rate than someone in Fayetteville because of local add-ons. Here’s another example that compares different locations in Arkansas:
- Little Rock (in Pulaski County) – State rate 6.5% + County 1.0% + City 1.25% = 8.75% total.
- Fayetteville (in Washington County) – State rate 6.5% + County 1.25% + City 2.0% = 9.75% total.
- Bentonville (in Benton County) – State rate 6.5% + County 1.0% + City 2.0% = 9.5% total.
It’s important to note that local rates can change, even as often as every quarter. To make things easier, Arkansas provides tools to look up the exact sales tax rate by address, so you always charge the correct amount. You can also visit the City and County Sales & Use Tax Rates page on the Arkansas Department of Finance and Administration (DFA) website for a downloadable PDF of the latest updates.
How to calculate Arkansas sales tax?
Calculating sales tax in Arkansas is pretty straightforward once you know your total rate. Since Arkansas has a statewide 6.5% tax plus additional city and county taxes, the first step is identifying the exact rate for your business location or the delivery address.
1. Find your total tax rate
Add together:
- The 6.5% state rate
- Your county tax rate
- Your city tax rate
- Any additional tax rate based on the type of business sale
Once you have the combined rate, you can calculate sales tax on any transaction.
2. Multiply the sale amount by the tax rate
Take the pre-tax price and multiply it by the combined rate. For example, if your total tax rate in Fayetteville is 9.75% and the item sells for $50:
$50 × 0.0975 = $4.88 sales tax
Your customer pays $54.88 total.
Using a Reverse Calculator (When You Want Prices to Include Tax)
Many businesses, especially restaurants, cafés, boutiques, and service providers, prefer to display a clean, all-in price that already includes tax. If that’s your goal, a reverse sales tax calculator can help you figure out the pre-tax price so your displayed price stays consistent.
How it works
Enter the final price (the amount you want customers to pay), and the calculator will break it into:
- The pre-tax amount
- The portion that represents Arkansas sales tax, combined with the local tax rate based on your city/county
Example:
If you want a final, tax-included price of $10.00 at a location with a 9.5% rate, the reverse calculator helps you determine the pre-tax price so that the total still comes out to exactly $10. The pre-tax price would be $9.05, which is the price you would enter into your point-of-sale system. This takes the guesswork out of pricing and promotes the collection of the correct sales tax behind the scenes.
What is subject to Arkansas sales tax?
In Arkansas, most tangible personal property is subject to sales tax. That means if you sell physical goods, clothing, electronics, furniture, beauty products, home goods, you name it, you’ll generally need to collect sales tax. Certain digital products, repair services, and short-term lodging are also taxable.
Arkansas also taxes many common services, including:
- Repair, alteration, and maintenance services
- Pest control
- Cleaning and janitorial services
- Some digital and electronic services
If your business provides taxable goods or services, you’re required to collect the appropriate state, county, and city sales tax based on where the sale takes place or where the item is delivered.
Is There Sales Tax on Food in Arkansas?
Yes, Arkansas does tax food, but at a reduced rate compared to the standard statewide rate. Most grocery food items are subject to a lower state tax rate of 0.125%, although local city and county taxes still apply. That means customers will pay more than 0.125% at the register, but the portion the state collects is significantly lower.
This reduced rate applies to typical grocery staples, fruits, vegetables, dairy, meat, dry goods, and other unprepared foods meant for home consumption. Prepared foods, however, do not qualify for this reduced rate.
Sales Tax on Restaurants in Arkansas
Restaurants, cafés, food trucks, and similar businesses follow a different set of rules because they sell prepared food, which is taxed at the full combined state and local rate. The same rate you’d apply to retail goods.
This category includes:
- Meals prepared on-site
- Hot foods
- Items combined by the seller (like sandwiches, smoothies, salads you assemble)
- Food sold with utensils provided by the business (plates, cups, cutlery, etc.)
However, many cities may add additional taxes specifically for hospitality businesses. The most common ones are Advertising & Promotion (A&P) taxes, sometimes referred to as the “hamburger tax”, and the Hotel/Motel/Restaurant (HMR) taxes. Here are a few examples to show how different cities layer their hospitality taxes:
- Fayetteville: Charges a 2% HMR tax on prepared food and beverages, plus a 5% supplemental beverage tax on alcoholic drinks.
- Little Rock: Adds a 10% mixed-drink supplemental tax on alcoholic beverages sold in restaurants, bars, hotels, and motels.
- Bentonville: Imposes a 1% tax on prepared foods and non-alcoholic beverages, with a separate lodging/meeting space tax used for tourism and economic development.
- Pine Bluff: Levies a 2% tourism tax on prepared food and beverages.
Because these hospitality taxes are city-specific, two restaurants only a few miles apart can have very different total tax rates. For restaurant operators, it’s important to know which local hospitality taxes apply in your area and ensure your point-of-sale (POS) system is set up to collect them correctly.
So, while buying groceries in Arkansas comes with a modest tax, dining out is taxed at the higher retail rate plus any applicable hospitality taxes, making restaurant sales one of the most heavily taxed categories in the state.
How DAVO Can Help Restaurants, Bars, and Retailers
Managing sales tax in Arkansas can get complicated, especially for restaurants and bars dealing with full tax rates, prepared food rules, and local hospitality taxes. DAVO by Avalara takes all of that off your plate by automatically setting aside the sales tax you collect each day and filing your return on time, every time.
Whether you run a café, bar, or retail shop, DAVO works directly with your POS to make sure the right amount of tax is collected, set aside, and paid to the state. It’s a simple, worry-free way to stay compliant and avoid late fees or surprises at the end of the month.
What is exempt from sales tax in Arkansas?
In Arkansas, certain purchases aren’t subject to the standard sales tax, either because of who is buying, what is being bought, or how it’s being used. For example:
- Sales for resale: If you’re buying goods with the intent to resell them, you won’t pay sales tax at the time of purchase. Suppliers will need a valid resale certificate from you.
- Qualified entities: Government agencies, certain nonprofits, and other eligible organizations can make purchases that are exempt when they provide proper documentation.
- Prescription drugs and certain medical equipment are exempt.
- Machinery and equipment used directly in manufacturing, some utilities used in manufacturing, and certain farming/agricultural equipment are exempt or eligible for special treatment.
When claiming an exemption, you’ll need the appropriate exemption certificate (often form ST-391), and you’ll want to keep your records in case of audit.
How to manage Arkansas sales tax exemptions?
Handling tax-exempt sales in Arkansas is pretty simple once you know what documentation to collect and how to keep your records organized. If a customer claims an exemption, whether they’re a reseller, a qualified nonprofit, or a government agency, you must have the correct Arkansas exemption certificate on file before you remove sales tax from the transaction.
Collect the Right Certificate
Your customer must provide a valid exemption certificate, such as:
- Resale Certificate (Form ST-391)
- Exempt Organization Certificate
- Government Exemption Documentation
The certificate should include the buyer’s information, the type of exemption, and a signature. Never assume an exemption. You need documentation for every exempt customer.
Verify the Certificate
While you’re not required to formally “approve” a certificate, you should make sure:
- It’s filled out completely
- It matches the type of purchase being made
- It appears legitimate (no expired or obviously incorrect info)
If something doesn’t look right, ask the buyer to clarify before excluding tax. You can always verify the certificate through the Arkansas Taxpayer Access Point (ATAP).
Keep Good Records
Arkansas requires businesses to keep exemption certificates on file for audit purposes. Store them in a secure place, digitally or physically, and keep them organized by customer. If the state audits you, having these ready will save time and prevent penalties.
Arkansas sales tax holiday
Arkansas holds a two-day sales tax holiday every year on the first weekend of August. During this weekend, qualifying items are exempt from both state and local sales tax. Shoppers can buy eligible items such as:
- Clothing priced $100 or less per item.
- Clothing accessories and equipment priced $50 or less per item.
- School supplies, school art supplies, and school instructional materials (no price cap for many of these).
- Certain electronic devices (often those used for school purposes)
Retailers must participate in the holiday and cannot charge tax on qualifying items during the event. Make sure your POS is updated, your staff know which items qualify, and online orders delivered during the holiday are also treated as tax-free.
Make your sales tax less taxing with DAVO.
How to apply for an Arkansas sales tax permit?
Before you can start collecting sales tax in Arkansas, you need a Sales and Use Tax Permit from the Arkansas Department of Finance and Administration. The process is pretty easy to navigate, but the state does require every seller, whether you’re opening a restaurant, launching a boutique, or selling online, to register before making your first taxable sale.
Here’s how to get your permit:
- Apply online through the Arkansas Taxpayer Access Point.
This is the fastest option. You’ll create an account, fill out your business details, and choose the taxes you need to register for (Sales & Use Tax). - Have your business info ready.
You’ll need your EIN (or SSN for sole proprietors), business address, ownership details, and the date you plan to start selling. - Pay the one-time $50 registration fee.
Unlike many states, Arkansas does charge a fee for a sales tax permit. It may take up to 2 weeks for Arkansas’s DFA to process your application. Once approved, the permit doesn’t expire unless you close your business. - Display your permit.
Arkansas requires the permit to be posted at your business location, where it’s visible to customers.
Once you’re registered via ATAP, this is where you’ll file, pay, and manage all sales tax tasks moving forward. Visit the state’s DFA website for more details on how to register for an Arkansas sales tax permit.
How to file Arkansas sales tax?
Arkansas requires you to file sales tax returns electronically through ATAP, even if you didn’t collect any tax for the period.
Here’s what the filing process looks like:
- Log into ATAP and select the period you’re filing for.
- Enter your total sales, including both taxable and exempt sales.
- Report the tax you collected based on the local rates where your sales occurred (Arkansas is destination-based).
- Review any credits or adjustments before submitting.
- Submit your return, even if you owe $0. Arkansas charges penalties for missed zero returns.
Once submitted, you’ll receive a confirmation number and the amount due.
How to pay Arkansas sales tax?
Arkansas gives businesses two ways to pay their sales tax, and both methods must be submitted electronically through the state’s payment system.
Option 1: ACH Debit
This is the simplest option for most businesses. When you file through ATAP, you authorize the state to withdraw the amount you owe directly from your bank account. You choose the draft date, and the payment is pulled automatically. Most retailers and restaurants use this method because it’s built directly into the filing process and doesn’t require any special setup.
Option 2: ACH Credit
With ACH Credit, you initiate the payment through your own bank. Your financial institution sends the funds to the state using the CCD+TXP format, which includes specific tax information in the addenda record. Not all banks support this format, so you’ll need to confirm with your bank or software provider before using it. This option is typically used by larger businesses or accounting departments that make multiple scheduled payments.
Arkansas does offer sales tax payments by credit card or debit card. Those options are only available for individual income tax. For sales tax, you must use either ACH Debit or ACH Credit to ensure your payment is properly processed and applied on time. For more details on payment options, visit the Arkansas Department of Finance and Administration’s website.
Arkansas sales tax due dates
Sales tax returns are usually due on the 20th of the month. How often you file will be based on your annual tax liability and assigned by the state. Once assigned, your frequency usually stays the same unless your business grows or shrinks significantly. Here’s how due dates work:
- Monthly Filers: Due on the 20th of the following month
- Quarterly Filers: Due April 20, July 20, October 20, and January 20
- Annual Filers: Due January 20 for the previous calendar year
If the 20th falls on a weekend or holiday, the due date shifts to the next business day.
Arkansas does not offer long grace periods. Returns and payments must be submitted on time to avoid penalties. The Arkansas DFA also provides a list of due dates for businesses to reference.
Arkansas sales tax discount
Arkansas offers a helpful incentive for businesses that file and pay their sales tax on time. You can receive a 2% discount on the local portion of your sales tax payment each month, which can make a noticeable difference for retailers, restaurants, and service businesses with steady foot traffic. The discount is capped at $1,000 per month, and that limit applies separately to each city and county you report to. It applies only to local sales tax, not local use tax.
If your business operates in multiple states and you want to see whether similar discounts are available elsewhere, you can refer to our full Sales Tax Discount Guide for a state-by-state breakdown. With DAVO, this collection allowance is returned to the business in full, sometimes covering the full subscription cost to DAVO
Arkansas sales tax penalty and interest
If you miss a filing or payment in Arkansas, the state adds both penalties and interest starting from the original due date of your return. Interest accrues at 10% annually on any unpaid tax until the balance is fully paid. Penalties depend on what was missed: filing late triggers the steepest consequences. A late return can lead to a 5% penalty for every month or partial month the return is overdue, capped at 35% of the tax owed.
If you submit the return on time but don’t pay the full amount, the penalty is lower, 1% per month on the unpaid tax, also up to a 35% maximum. Arkansas doesn’t allow these penalties to stack beyond that limit, but they can still add up quickly. Filing and paying on schedule is the best way to avoid unexpected charges and keep your account in good standing.
How DAVO can help with Arkansas sales tax
Managing sales tax in Arkansas can feel like a lot, especially with local rates, hospitality taxes, strict due dates, and limited payment options. DAVO helps take that stress off your plate by automatically setting aside the sales tax you collect each day, then filing and paying it on your behalf when it’s due, on time, every time, guaranteed. Everything runs in the background through your POS, so you never have to worry about missing a return, paying late, or navigating penalties again. Whether you operate a restaurant, bar, or retail shop, DAVO keeps you compliant and gives you one less thing to manage.
Choose your POS system to get started with DAVO.
Arkansas Department of Finance & Administration Information:
