Arkansas Veteran Benefits 2025: Property Tax, Income Tax & Financial Guide
Complete guide to Arkansas veteran tax benefits: property tax exemptions, income tax treatment, financial benefits, and money-saving strategies for disabled veterans.
Arkansas Veteran Benefits 2025: Property Tax, Income Tax & Financial Guide
Arkansas offers exceptional tax benefits for veterans, particularly for disabled veterans. If you're considering Arkansas or already living here, understanding these benefits can save you thousands of dollars annually while enjoying one of the lowest costs of living in the nation.
Bottom Line Up Front
Here's what Arkansas offers veterans:
- Military retirement pay: 100% exempt from state income tax
- Property tax exemption: 100% disabled veterans pay zero property taxes on homestead and up to 40 acres
- VA disability pay: Completely tax-free (federal and state)
- Vehicle registration: Free license plates for disabled veterans (renewal $1/year)
- Hunting/fishing licenses: Lifetime licenses for $1.50-$3.00 for 100% disabled veterans
- Surviving spouse benefits: Unremarried spouses maintain property tax exemption
Potential annual savings for a 100% disabled veteran: $2,000-$4,000+ depending on property value and location.
Income Tax Treatment for Veterans
Military Retirement Pay - Fully Exempt
Arkansas doesn't tax military retirement pay. Period. All military retired pay is exempt from Arkansas income taxes.
What this means:
- Retire with $30,000/year military pension? Keep all of it
- Retire with $50,000/year? Still keep every penny
- No age restrictions, no income limits, no phase-outs
Arkansas is one of only 25 states that fully exempt military retirement pay from state income taxes. Unlike states with partial exemptions, Arkansas gives you the full amount.
VA Disability Compensation - Tax-Free
All VA disability compensation is exempt from federal and state taxation. Whether you receive $171/month for a 10% rating or $3,900+/month for 100% with dependents, you won't pay a dime in taxes on it.
Survivor Benefit Program (SBP)
SBP payments and all survivor annuities (RCSBP, RSFPP) are exempt from Arkansas state income tax. Military pay received by service members serving in active or reserve components is also exempt.
State Tax Rates (For Other Income)
Arkansas operates on a graduated income tax system with recent improvements:
The state has been reducing its tax burden on residents with recent reforms. While specific brackets vary, Arkansas maintains moderate tax rates on non-military income sources.
Standard deduction: Arkansas offers standard deductions for individual filers
Additional retirement income: Up to $6,000 of income from private or government employer-sponsored retirement plans is also tax-exempt in Arkansas (separate from military retirement).
Comparison to Neighboring States
| State | Military Retirement | Income Tax Rate | Property Tax Exemption (100%) |
|---|---|---|---|
| Arkansas | 100% exempt | Graduated | Full exemption |
| Missouri | 100% exempt | 1.5-4.8% | Varies by county |
| Oklahoma | 100% exempt | 0.25-4.75% | Up to $172K value |
| Tennessee | N/A | No income tax | Limited exemption |
| Texas | N/A | No income tax | Varies |
| Louisiana | 100% exempt | 1.85-4.25% | Up to $150K value |
| Mississippi | 100% exempt | 4-5% | Up to $300K value |
Arkansas's combination of zero tax on military retirement and full property tax exemptions for 100% disabled veterans makes it highly competitive in the region.
Property Tax Exemptions for Veterans
100% Disabled Veterans - Full Exemption
If you're rated 100% Permanent and Total (P&T) by the VA, you're exempt from all state and local property taxes on:
- Your homestead (primary residence)
- Up to 40 acres of real property contiguous to the dwelling (as long as it's not used for commercial purposes)
- Personal property
No income limits. No property value caps.
Real-World Examples
Little Rock (Pulaski County)
- Home value: $275,000
- County property tax rate: ~0.6%
- Annual savings: $1,650
Fayetteville (Washington County)
- Home value: $400,000
- County property tax rate: ~0.7%
- Annual savings: $2,800
Bentonville (Benton County)
- Home value: $480,000
- County property tax rate: ~0.6%
- Annual savings: $2,880
Fort Smith (Sebastian County)
- Home value: $176,000
- County property tax rate: ~0.65%
- Annual savings: $1,144
Jonesboro (Craighead County)
- Home value: $318,000
- County property tax rate: ~0.6%
- Annual savings: $1,908
Eligibility Requirements
Veterans who qualify for the exemption include those with:
- Service-connected 100% total and permanent disability rating from the VA
- Special Monthly Compensation for the loss or loss of use of one or more limbs
- Total blindness in one or both eyes
Important: You must be occupying the home to qualify for the tax exemption.
What's NOT Covered
The exemption does NOT apply to:
- Rental property
- Special improvement taxes
- City liens
- Sanitation fees
- Timber taxes
- Land-only parcels (must include dwelling)
Annual Recertification Required
Critical detail: You must be recertified annually. The deadline to submit your Summary of Benefits is October 15th each year.
Missing this deadline could result in losing your exemption for the following year. Mark your calendar.
2025 Expansion: Increased Acreage Limit
HB1129 amends the definition of "homestead" to increase the amount of real property contiguous to a dwelling that's eligible for the exemption. This change is effective for assessment years beginning on or after January 1, 2025.
Previously, the limit was lower - the expansion to 40 acres provides significantly more value for rural veterans with larger properties.
Partial Disability Ratings
Unfortunately, Arkansas doesn't offer graduated property tax exemptions for veterans with disability ratings below 100%. If you're rated 90%, 70%, or any percentage under 100%, you don't qualify for the homestead exemption based on VA disability alone.
However, you still benefit from:
- Zero state income tax on military retirement
- Tax-free VA disability compensation
- Vehicle registration benefits
- Hunting/fishing license discounts (70%+ rating)
Surviving Spouse Benefits
Upon the death of the disabled veteran, the surviving spouse and minor dependent children shall be exempt from payment of all state taxes on the homestead and personal property, as long as the surviving spouse remains unmarried.
This is a significant benefit that protects families after the veteran's passing.
What this means: If you're a 100% disabled veteran and pass away, your spouse can continue living in the home without paying property taxes as long as they don't remarry.
Vehicle Registration Benefits
Disabled Veteran License Plates - Free
Arkansas offers free disabled veteran license plates for eligible veterans.
Eligibility: State law currently allows any veteran who has been determined to be at least 10% disabled due to their military service to register for a Disabled Veteran license plate.
Cost:
- Initial plate: FREE
- Annual renewal fee: $1.00
- One additional plate may be issued to the eligible veteran for $4.00
Parking privileges: A vehicle displaying an Arkansas license plate beginning with the letters "DV" or "DAV" indicates a 100% disabled veteran. The vehicle may use disability parking spaces when transporting the disabled veteran.
Tax Exemptions for Specially Adapted Vehicles
Eligible disabled veterans do not have to pay taxes on specially adapted vehicles or equipment purchased with assistance from the VA.
Who qualifies: Veterans who receive funds from the VA to purchase or modify a specially adapted vehicle to accommodate a service-connected injury or disability.
What's exempt: The vehicle purchase and adaptive equipment are exempt from state sales taxes.
Surviving Spouse Plate Transfer
One plate issued to the eligible veteran may be reissued to his or her surviving spouse for a fee of $4.00.
Other Financial Benefits
Hunting and Fishing Licenses
Arkansas offers some of the best hunting and fishing license benefits in the nation for disabled veterans.
100% Totally and Permanently Disabled Veterans
Lifetime Fishing License: $1.50
- Authorizes fishing in all Arkansas state waters
Lifetime Hunting License: $1.50
- Provides privileges equivalent to Resident Sportsman's License
Lifetime Combination License: $3.00
- Includes both hunting and fishing benefits
Requirements:
- 100% totally and permanently disabled with VA certification
- Proof of one year Arkansas residency
- Must apply by mail to Arkansas Game and Fish Commission
Veterans with 70%+ Disability Rating
Lifetime Combination License: $52.50
- Includes Arkansas trout and duck stamps
Eligibility:
- Service-connected disability rating of 70% or higher, OR
- Service-connected disability rating of 50% or higher AND Purple Heart recipient
How to Apply
All disabled veteran licenses require:
- Proof of at least one year of Arkansas residency
- Documentation from the VA of disability rating
- Application by mail to Arkansas Game and Fish Commission, Little Rock Office
- Contact: 833-345-0325 or 501-207-0326
Standard cost comparison: Regular Lifetime Sportsman License costs significantly more for non-disabled residents. The $1.50-$3.00 cost for 100% disabled veterans represents a savings of hundreds of dollars.
State Hiring Preference
Arkansas offers veterans hiring preference for state employment.
Who qualifies:
- Veterans who were honorably discharged from active duty service
- National Guard or U.S. Armed Forces Reserve members with at least six years' time in service
- Surviving spouse of eligible service member
- Disabled veterans over age 55 entitled to VA pension or compensation
How it works: If an examination is used for hiring, eligible applicants will have points added to passing scores. Veterans also receive priority consideration for promotion and retention.
Financial Impact Analysis
Let's calculate the 20-year financial impact for a 100% disabled veteran retiring in Arkansas vs. other states.
Scenario: E-8 Retiree, 20 Years Service, 100% Disabled
Annual income:
- Military retirement: $35,000
- VA disability: $45,000 (100% with dependents)
- Total: $80,000
Home: $300,000 (approximate Arkansas median in metro areas)
Arkansas Savings Over 20 Years
| Benefit | Annual Savings | 20-Year Total |
|---|---|---|
| Property tax exemption | $1,800 | $36,000 |
| Military retirement (vs 5% state tax) | $1,750 | $35,000 |
| Vehicle registration | $50 | $1,000 |
| Hunting/fishing license | $100 | $2,000 |
| TOTAL | $3,700 | $74,000 |
Note: This doesn't account for inflation or property value appreciation, which would increase savings over time.
Comparison: Arkansas vs. Missouri
Same scenario, but in Missouri (which also exempts military retirement):
| State | Property Tax Savings | Income Tax Savings | Total 20-Year Savings |
|---|---|---|---|
| Arkansas | $36,000 | $35,000 | $74,000 |
| Missouri | Varies (less generous) | $35,000 | ~$50,000 |
Arkansas advantage: $24,000 over 20 years
How to Claim Your Benefits
Step 1: Property Tax Exemption
Timeline: Apply as soon as possible after receiving 100% P&T rating
Required documents:
- VA rating decision letter showing 100% P&T
- Driver's license showing Arkansas residency
- Property deed or mortgage statement
- Completed homestead exemption application
Where to apply: Your county assessor or county collector's office
Major county offices:
- Pulaski County (Little Rock): (501) 340-8330
- Washington County (Fayetteville): (479) 444-1520
- Benton County (Bentonville): (479) 271-1013
- Sebastian County (Fort Smith): (479) 782-5065
- Craighead County (Jonesboro): (870) 933-4520
Processing time: 30-60 days typically
Annual deadline: You must submit Summary of Benefits by October 15th annually to maintain your exemption.
Step 2: Vehicle Registration Exemption
Where: Arkansas Department of Finance and Administration or county revenue office
Documents needed:
- VA rating decision letter (showing at least 10% disability)
- Current vehicle registration
- Arkansas driver's license
- Proof of residence
How to apply:
- Complete disabled veteran license plate application
- Submit proof of VA disability rating
- Pay $4.00 fee for first plate (if applicable)
- Renew annually for $1.00
Application available at: www.dfa.arkansas.gov
Step 3: Hunting/Fishing License (If Applicable)
For 100% disabled veterans:
- Gather required documents:
- VA certification of 100% total and permanent disability
- Proof of one year Arkansas residency
- Download application from Arkansas Game and Fish Commission website
- Mail application to: Arkansas Game and Fish Commission, Little Rock Office
- Pay $1.50 (fishing), $1.50 (hunting), or $3.00 (combination)
Contact: 833-345-0325 or 501-207-0326
Frequently Asked Questions
Do I need to reapply for the property tax exemption every year?
No, you don't reapply completely, but you must submit your Summary of Benefits by October 15th annually for recertification. Failure to recertify will result in losing your exemption for the following year.
What if I'm rated 90% or lower?
Arkansas doesn't offer property tax exemptions for ratings below 100% based solely on VA disability. However, you still benefit from:
- Zero state income tax on military retirement
- Tax-free VA disability compensation
- Vehicle registration benefits (10%+ rating)
- Hunting/fishing license discounts (70%+ rating)
Can I get the property tax exemption on a second home or rental property?
No. The exemption applies only to your primary residence (homestead) and up to 40 contiguous acres, as long as it's not used for commercial purposes.
What happens if I sell my home and buy another in Arkansas?
You'll need to reapply for the exemption in your new county. Bring:
- Your VA rating letter showing 100% P&T
- New property documentation (deed or mortgage)
- Arkansas driver's license
- Proof of previous exemption (if available)
Contact your new county assessor's office to start the application process.
Does the 40 acres have to be contiguous with the home?
Yes. The property must be adjacent to and contiguous with your primary residence. You can't claim exemption on separate parcels.
Are military retirement benefits taxed if I move to Arkansas from another state?
No. As long as you establish Arkansas residency, all military retirement pay is exempt from state income tax regardless of where you served or previously lived.
Do I need to be retired from the military to get these benefits?
- Property tax exemption: No, only need 100% P&T rating (can be active, reserve, or retired)
- Income tax exemption on military retirement: Yes, must be receiving military retirement pay
- Vehicle/hunting benefits: No, only need qualifying disability rating
Can my surviving spouse keep the property tax exemption?
Yes. Arkansas law explicitly allows unremarried surviving spouses and minor dependent children of disabled veterans to maintain the property tax exemption. This is one of the better surviving spouse provisions in the nation.
What if my county denies my exemption application?
You have the right to appeal. Contact:
- Arkansas Department of Veterans Affairs: (501) 370-3820
- County assessor (request appeals process)
- County veterans service officer
You can also contact your county officials or state legislators for assistance.
Does Arkansas tax my TSP or 401(k) withdrawals?
Arkansas taxes TSP and 401(k) withdrawals as regular income at the state's graduated income tax rates. However, up to $6,000 of income from retirement plans (other than military retirement) is exempt. Military retirees coming from higher-tax states will still see significant overall savings.
Will these benefits affect my federal taxes?
No. Property tax exemptions and state income tax exemptions don't impact your federal tax liability. Military retirement and VA disability compensation remain tax-free at the federal level regardless of state benefits.
What's the difference between "disabled veteran" plates with 10% vs 100% disability?
The plates themselves may look similar (DV or DAV designation), but:
- 10%+ rating: Qualifies for free plates, $1 annual renewal
- 100% rating: Also qualifies for disability parking privileges when transporting the veteran
Check with the Arkansas Department of Finance and Administration for specific plate types and parking privileges.
Key Takeaways
Arkansas delivers real financial value for veterans:
- 100% disabled veterans can save $40,000-$80,000+ over 20 years through property tax exemptions alone
- All military retirees keep their entire retirement check - no state taxes
- Disabled veterans (10%+) get free vehicle registration
- 100% disabled veterans pay virtually nothing for lifetime hunting and fishing licenses
- Surviving spouses maintain property tax exemptions if they don't remarry
Combined with Arkansas's cost of living that's 11-17% below the national average (depending on the source), these benefits stretch your retirement dollars significantly further than in many other states.
If you're 100% P&T and haven't applied for the homestead exemption yet, do it today. Just remember to recertify by October 15th every year.
Resources
- Arkansas Department of Veterans Affairs: (501) 370-3820 | www.veterans.arkansas.gov
- Main Office: 2200 Fort Roots Drive, Building 65, Room 119, North Little Rock, AR 72114
- Property Tax Exemption Info: Contact your county assessor or collector
- Disabled Veteran License Plates: www.dfa.arkansas.gov
- Arkansas Game and Fish Commission: 833-345-0325 or 501-207-0326
- County Veterans Service Officers: Available in most counties to help with applications
Information current as of January 2025. Tax laws and benefit amounts may change. Verify specific details with your county assessor, the Arkansas Department of Veterans Affairs, and relevant state agencies.