Ark. Code Ann. § 26-51-404 (2026)
Gross income generally
History. Acts 1929, No. 118, Art. 3, § 8; Pope's Dig., § 14031; Acts 1939, No. 324, § 1; 1941, No. 129, § 6; 1953, No. 230, § 1; 1957, No. 144, §§ 1, 2; 1965, No. 570, § 1; 1967, No. 222, § 1; 1969, No. 462, § 1; 1971, No. 226, § 2; 1975, No. 683, § 1; 1977, No. 898, § 2; 1981, No. 817, § 1; 1981, No. 914, § 3; 1983, No. 379, §§ 3, 6; 1985, No. 486, § 5; A.S.A. 1947, § 84-2008; Acts 1987, No. 382, §§ 4, 7-11, 32; 1987 (1st Ex. Sess.), No. 48, § 1; 1989, No. 826, §§ 9, 10, 18-21; 1995, No. 560, § 1; 1995, No. 732, § 1; 1995, No. 1160, §§ 8, 10, 11; 1995, No. 1303, § 4; 1997, No. 328, § 7; 1997, No. 951, §§ 3-5, 6, 22, 23; 1997, No. 1189, § 1; 1999, No. 1126, §§ 16-23; 1999, No. 1217, § 10; 2001, No. 773, § 3; 2003, No. 663, §§ 2-6; 2005, No. 94, §§ 2, 3; 2005, No. 189, § 2; 2005, No. 675, §§ 2-5; 2007, No. 196, § 1; 2007, No. 218, §§ 16, 17; 2009, No. 372, §§ 4-9; 2011, No. 787, §§ 9-14; 2013, No. 1254, §§ 1-4; 2015, No. 580, §§ 13, 14; 2017, No. 141, §§ 4, 5; 2017, No. 155, §§ 10-14; 2017, No. 884, § 15; 2019, No. 870, §§ 1, 2; 2019, No. 910, § 3712.
A.C.R.C. Notes. Acts 1981, No. 914, § 2, provided: “The purpose of this act is to make technical amendments to the Arkansas Tax Procedure Act, Acts 1979, No. 401, and to certain Arkansas income tax statutes to eliminate the procedural problems that have arisen since the enactment of Acts 1979, No. 401, and to make the Arkansas income tax statutes conform to several recent amendments to their counterparts in the federal income tax statutes.” The act became effective for all periods after December 31, 1980.
Acts 1983, No. 379, § 2, provided: “The purpose of this act is to make technical amendments to the Income Tax Act of 1929, Acts 1929, No. 118, as amended, to the Estate Tax Law of Arkansas, Acts 1941, No. 136, as amended, and to the Arkansas Tax Procedure Act, Acts 1979, No. 401, as amended, to eliminate the procedural problems that have arisen since the enactment of these acts and to make the Arkansas income and estate tax statutes conform to several recent amendments to their counterparts in the federal income and estate tax statutes, and for other purposes.” The act was effective for all income years after, or estate tax return filing dates coming after, December 31, 1982.
As amended by Acts 1995, No. 1303, § 4, subdivision (b)(22) began: “‘Gross income,’ as defined in § 26-51-401, shall not include.”
Acts 1997, No. 1189, § 3, provided: “It is determined by the General Assembly that Arkansas income tax laws concerning the taxability of dividends received from a subsidiary are at variance with corresponding federal income tax laws, although the existence or non-existence of any such variance with respect to corporations filing an Arkansas consolidated tax return is subject to existing disputes. It is further determined that state income tax laws should have been the same as federal income tax laws and this Act is adopted to clarify that these dividends are to be treated for state income tax purposes in the same manner they would be treated for federal income tax purposes for all corporations to which the Act is applicable. It is further found that there are pending cases and controversies involving the taxability of dividends from subsidiaries for state income tax purposes and that this Act is not intended to affect any existing cases or controversies this issue or to have any effect upon the interpretation of prior law.”
Acts 2005, No. 189, § 1, provided: “The purpose of this act is to clarify current law regarding cost recovery for annuitants under the Income Tax Act of 1929, Arkansas Code § 26-51-101 et seq.”
Pursuant to its own terms, subdivision (b)(28) of this section is only effective for tax years 2006 and 2007.
Amendments. The 2009 amendment, in (b), substituted “2009” for “2007” in (b)(1) and (b)(2), for “1999” in (b)(10), for “1997” in (b)(11), for “2003” in (b)(19), and for “2005” in (b)(27), and substituted “qualified military benefits” for “child care benefits” in (b)(27).
The 2011 amendment substituted “January 1, 2011” for “January 1, 2003” in (a)(4), (b)(20), and (b)(25); substituted “January 1, 2011” for “January 1, 2009” in (b)(10) and (b)(11); and rewrote (b)(14).
The 2013 amendment substituted “January 2, 2013” for “January 1, 2011” throughout the section; deleted (b)(9)(A) and (B); added “26 U.S.C. § 107, as in effect on January 2, 2013, regarding the rental value of parsonages, is adopted for the purpose of computing Arkansas income tax liability” to the end of (b)(9); and substituted “January 2, 2013” for “January 1, 2009” in (b)(19).
The 2015 amendment substituted “January 1, 2015” for “January 2, 2013” in (b)(10) and (b)(19).
The 2017 amendment by No. 141 added (a)(1)(G) and (H), rewrote (b)(6)(B), and made stylistic changes.
The 2017 amendment by No. 155 substituted “2017” for “2013” in (a)(4); in (b)(10) and (b)(19), substituted “2017” for “2015”; substituted “January 1, 2017” for “March 30, 2010” in (b)(14)(B); and added (b)(29).
The 2017 amendment by No. 884 substituted “January 1, 2017” for “January 2, 2013” in (b)(20).
The 2019 amendment by No. 870 substituted “January 1, 2019” for “January 1, 2017” in (b)(10); and added (b)(30).
The 2019 amendment by No. 910 substituted “Secretary of the Department of Finance and Administration” for “Director of the Department of Finance and Administration” in (b)(7)(B).
Effective Dates. Acts 2015, No. 580, § 21: effective for tax years beginning on or after January 1, 2014.
Acts 2017, No. 141, § 63, as amended by Acts 2017, No. 596, § 1: Jan. 1, 2018. Effective date clause provided: “Sections 2 through 61 of this act are effective for tax years beginning on and after January 1, 2018.”
Acts 2017, No. 155, § 25: effective for tax years beginning on and after January 1, 2015.
Acts 2019, No. 870, § 15: effective for tax years beginning on or after January 1, 2019.
Research References
ALR.
Exclusion of Gain from Sale of Principal Residence under 26 U.S.C. § 121. 14 A.L.R. Fed. 3d 7 (2016).
Construction and Application of 26 U.S.C. § 105(a) Respecting Determination Whether Taxpayer's Disability Insurance Payments Constitute Gross Income. 25 A.L.R. Fed. 3d Art. 11 (2017).
Ark. L. Notes.
Beard, Transfers of Property between Spouses and Former Spouses — An Overview of Income Tax Issues and a Suggested Analytical Approach to Such Issues, 1990 Ark. L. Notes 1.
Ark. L. Rev.
Income Tax Amendments, 7 Ark. L. Rev. 346.
Constitutional Law — Corporate Income Taxation Classification for Income Tax Purposes, 14 Ark. L. Rev. 168.
U. Ark. Little Rock L. Rev.
Legislative Survey, Taxation, 4 U. Ark. Little Rock L.J. 609.
Legislation of the 1983 General Assembly, Taxation, 6 U. Ark. Little Rock L.J. 636.
Survey of Legislation, 2001 Arkansas General Assembly, Tax Law, 24 U. Ark. Little Rock L. Rev. 613.
Survey of Legislation, 2003 Arkansas General Assembly, Education Law, Income Tax Computation, 26 U. Ark. Little Rock L. Rev. 381.
Case Notes
Constitutionality.
Acts 1931, No. 220, relieving domestic corporations doing business entirely outside the state of Arkansas from the payment of any income tax to the state, when read in connection with the General Income Tax Act of 1929, which imposes an income tax upon a domestic corporation doing business both within and without the state on income derived from sources outside Arkansas, denied to such domestic corporation the equal protection of the laws and amounted to the taking of its property without due process. Cheney v. Stephens, Inc., 231 Ark. 541, 330 S.W.2d 949 (1960).
Since court could reasonably conceive of lawful purposes for state's classification scheme in providing tax exemptions for retirement income of government employees, such scheme could not be held to have been arbitrarily enacted; therefore, since state's classification confers a benefit upon public employees that is available to all workers of this calling and class throughout Arkansas, Ark. Const., Art. 2, § 18, and U.S. Const. Amend. 14 are not violated. Streight v. Ragland, 280 Ark. 206, 655 S.W.2d 459 (1983).
Tax legislation exempting retirement income of government employees is not special legislation, for it is not arbitrary; tax exemption acts are not special acts as that term has been defined, since it is not enough that the state has separated some class from the operation of a law, rather, the separation must be arbitrary. Streight v. Ragland, 280 Ark. 206, 655 S.W.2d 459 (1983).
Emergency Income Tax Rule, which was enacted by the Arkansas Department of Finance and Administration in response to the declaration that § 26-51-307(c) was unconstitutional, was also unconstitutional because it was clear that the General Assembly never intended I.R.C. § 72 be applied to recovery of after-tax contributions in employment-related retirement plans. Weiss v. Maples, 369 Ark. 282, 253 S.W.3d 907 (2007).
Construction.
Section § 26-51-307(c) clearly provides that cost of contributions to a retirement plan may not be deducted in computing income for State tax purposes, and subdivision (b)(24)(B) of this section provides that annuity income from retirement plans is subject to § 26-51-307 rather than subsection (b) of this section; a retirement plan could contain pre-tax contributions upon which no income tax has ever been paid, employer contributions upon which no income tax has ever been paid, after-tax contributions upon which income tax has been paid, and the gain from pre-tax contributions and after-tax contributions upon which no income tax has ever been paid, and the above quoted statutes speak to income. Weiss v. McFadden, 353 Ark. 868, 120 S.W.3d 545 (2003).
Dividends.
Stock dividends received by domestic corporation from foreign corporation not doing business in state held properly charged in the domestic corporation's income tax. Temple v. Gates, 186 Ark. 820, 56 S.W.2d 417 (1933).
Parent company was required to add back to its gross income nontaxable dividend income from its subsidiary for the restricted purpose of computing the net operating loss to be carried forward. Kansas City S. Ry. v. Pledger, 301 Ark. 564, 785 S.W.2d 462 (1990).
Gifts.
Where husband sold land and wife relinquished her dower, with the wife receiving one-third the purchase price, the one-third amount was taxable income on the part of the husband, since the wife's interest in the land was inchoate and not one that she could convey, and the payment to the wife amounted to no more than a gift of part of the purchase price by the husband. Le Croy v. Cook, 211 Ark. 966, 204 S.W.2d 173 (1947).
Cited: Wiseman v. Interstate Pub. Serv. Co., 191 Ark. 255, 85 S.W.2d 700 (1935); St. Louis Sw. Ry. v. Ragland, 304 Ark. 1, 800 S.W.2d 410 (1990); Weiss v. McFadden, 356 Ark. 123, 148 S.W.3d 248 (2004).