Arkansas has received nominations for 85 census tracts as Qualified Opportunity Zones. These communities have been identified as low-income areas, which can now be helped through incentives offered to private investors. Earning this distinction came through a process that was a product of the 2017 Tax Cuts and Jobs Act. Part of that process included nominations from the governor and CEO of U.S. Territories. Arkansas now features opportunity zones throughout the state and the counties with higher concentrations of opportunity zones are as follows:
Opportunity Zones were designed to help areas that are labeled as economically distressed. Low income and high poverty rates help to determine which census tracts qualify. Private investments into properties in these areas come with capital gains tax incentives. This is a way to invest in communities with the intention of making the area more economically viable. There are certain properties that do not qualify for the incentives and a list of ones that do because they are intended to bolster the overall stature of the community.
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Arkansas Tax Situation
Arkansas features one of the better tax situations, not just in the south, but in the entire country. There are six tax brackets for Arkansas residents ranging from 0.9 percent to 6.9 percent. Each year income tax rates are being significantly reduced and by the year 2022, the initial $5k in income will be exempt
Property taxes are considered low as just nine other states are lower than Arkansas on average. A median-priced Arkansas home has annual property taxes of $721. The price of homes is also considered very affordable which makes ownership much easier in the state of Arkansas.
Sales tax in Arkansas is 7 percent, which is administered by the state. There are only two municipalities that add a percentage to that 7 percent. The vehicle sales tax of 5 percent and that is 2 percent less than the common rate. Counties decide their own motor vehicle taxes. Motor fuel taxes are applied, although they remain at just 19 cents per gallon.
Industries with Tax Breaks
Tax breaks in the state of Arkansas are offered to a variety of industries. There have been recent movements to add new industries and the state has responded with generous tax breaks. Here is a look at some of the industries that benefit from these programs.
- Aerospace – This sector may utilize tax incentives that provide access to millions of dollars.
- Technology – There are several tax incentive programs aimed at companies in the tech industry as Arkansas is in need of improving this industry.
- Manufacturing – There are advantageous tax benefits for manufacturing companies who move their headquarters to the state of Arkansas.
- Timber – Arkansas offer incentives for investments in the establishment or expansion of its timber industry
- Corporate and shared services – There has been a movement to bring more corporations to the state of Arkansas.
The tax breaks do not extend solely to specific industries, as there has been recent support for universal incentives and programs. However, the tax incentives that have been put to use are continuing to create more jobs, which continues to be a primary concern in Arkansas. Some programs require companies to maintain and even add a certain number of employees to stay qualified for the tax breaks.
Arkansas State Financial Facts
A low cost of living has made life affordable, even where wages are not extremely high in Arkansas. The home base of Wal-Mart in the state of Arkansas has also helped it from a financial standpoint, although there are areas that still have low median incomes among residents. Here are some more key financial facts regarding the state of Arkansas:
- Median household income – $43,813
- Median household savings
- $0 in savings: 35%
- $1,000 or less in savings: 59%
- Total household investments
65.6 percent of families that own their home
Median value of Arkansas home – $163,000
16.4 percent poverty rate in Arkansas
Current economic condition of Arkansas
Arkansas’s economy is lacking when compared to the rest of the country as it is close to last in annual economic growth. The unemployment rate remains at 3.8, which is not the main reason for its downtrodden economy. There are some rural areas of the state where industry is minimal. Cost of living is lower, but that is also because there is a lower median wage across the state. The average weekly wage checks in at $760.
The GDP of Arkansas continues to remain as one of the bottom three in the nation. The presence of Wal-Mart and its headquarters in the city of Bentonville has helped drive the economy and is responsible for a vast number of jobs in the state. Reliance on the superstore headquarters has compensated for the lack of tech industries in Arkansas. That has prompted more tax incentives towards companies in an effort to attract them to Arkansas.
Arkansas’s response to the financial crisis of 2009 led to a lot of economic insecurity and there was no immediate answer. Arkansas was one of the state’s hit hardest by the crisis and subsequent recession. Almost a decade later, many rural residents are still feeling the aftereffects. The population continued to decrease in the Coastal Plains region as well as in the Delta region. From 2010 to 2014 the population growth was almost a full two percent lower than the national average. There really was no long-term solution and if not for the presence of the Wal-Mart headquarters, Arkansas would unquestionably have the worst economy of any state.
Primary Industries in Arkansas
The Arkansas economy relies on a number of industries for its economy. There have been some changes in the last decade as agriculture has started to fade and the search for new industry continues. However, there are some industries that have been an integral part of the state’s economy. Here is a look at the main industries in Arkansas:
- Transportation equipment
- Software development
Opportunity Zones in Arkansas
There are 6 Arkansas-based companies on the Fortune 500 list, including industry giant Wal-Mart. Select cities are more appealing destinations for individuals and families, although there are still several areas in need of assistance in elimination their existing economic downturns. In the state of Arkansas, there are a lot of counties with just one opportunity zone. Here are the counties that feature more than one census tract that has qualified as an opportunity zone.
There are some communities that remain economically challenged in the state of Arkansas. Osceola currently holds the distinction of having the state’s highest unemployment rate, along with a poverty rate that has surpassed 35 percent. The median income is lowest in the city of Camden as it stands at just $25,234 per year. Other cities also in need of economic assistance are Newport, Mena and Crossett. These cities are just a few in need of an economic turnaround and a change could be realized through the Opportunity Zones introduced by 2017 Tax Cuts and Jobs Act.