Arkansas LLC structure and cost: a falling income tax and a protected series, offset by a flat franchise tax every LLC pays

Arkansas has spent several years cutting its income tax, bringing the top rate down to 3.9%, and it authorizes a protected series so one entity can hold several properties in walled-off cells. Those are real advantages for a real estate holder. The offsets are two: a flat $150 franchise tax that every Arkansas LLC pays regardless of whether it earned a dollar, and one of the highest sales taxes in the country. So Arkansas is favorable on income and structure and less so on the fixed costs. Take the income tax first.

The falling income tax

Start with the rate, which keeps dropping.

Arkansas’s top individual income tax rate is 3.9% for 2026, cut repeatedly from 5.9% just a few years ago.

A standard Arkansas LLC is a pass-through, so its income lands on the members’ returns at Arkansas’s rates, with a top marginal rate of 3.9% for 2026 that applies to net income above roughly $24,300, and a lower 2% band beneath it. Arkansas has cut the top rate in nearly every recent session, down from 5.9% in 2021, and continued the reductions in a 2026 special session, so the direction of travel is steadily downward. The corporate top rate is 4.3%. On income, Arkansas is now competitive with its low-tax neighbors, which is a meaningful change from its historically higher rates. The sales tax runs the other way.

Arkansas’s state sales tax is 6.5%, among the highest in the country, though groceries became state-exempt in 2026.

Arkansas’s 6.5% state sales tax is the second-highest state rate in the country, and local additions can push the combined rate above 11% in some cities, which raises the cost of materials and services for a property operation. Arkansas did remove the state sales tax on groceries starting in 2026, though local taxes on food remain. For an investor, the high sales tax is a cost on the operating side that partly offsets the low and falling income tax.

The protected series, and moving property in

On structure, Arkansas offers a series in an unusual place.

Arkansas authorizes a protected series under a separate act, so one entity can hold several properties in walled-off cells.

Arkansas allows a protected series, but it kept the series rules in a separate statute, the Uniform Protected Series Act at Ark. Code Section 4-37-101, rather than folding them into the 2021 LLC act. The substance is the same as in other series states: a single LLC can establish multiple series, each holding its own property and shielded from the others’ liabilities. The series LLC guide covers the form and its trade-offs, including that series law is newer than separate LLCs. In Arkansas the series has a specific cost advantage, because of the franchise tax.

Because every Arkansas LLC pays a flat $150 franchise tax, a protected series can be cheaper than several separate LLCs.

Arkansas charges a flat $150 franchise tax per LLC each year, covered on the filing page, so a multi-property investor who forms a separate LLC for each property pays $150 for each of them, every year, regardless of income. A protected series, by contrast, is generally one entity, which can mean one franchise tax covering several properties, so the series structure can be materially cheaper to maintain than a stack of separate LLCs in Arkansas specifically. That is the seam a CPA comparing structures should weigh: in a state with a flat per-entity franchise tax, the protected series is not just a convenience but a recurring cost saver, and the moderate 0.33% transfer tax on moving property, under Section 26-60-105, is small enough that consolidating into a series is not blocked by transfer cost.

The bottom line

Arkansas’s top individual income tax rate is 3.9% for 2026, cut repeatedly from 5.9%, so LLC income passes through at a low and falling rate.

Arkansas’s 6.5% sales tax is among the highest in the country, an operating-side cost that offsets the low income tax, though groceries are now state-exempt.

Arkansas authorizes a protected series under Section 4-37-101, so one entity can hold several properties in walled-off cells.

Because every Arkansas LLC pays a flat $150 franchise tax, a protected series can be cheaper to maintain than several separate LLCs.

The transfer tax is a modest 0.33%, so consolidating properties into a series is not blocked by the cost of moving them.

What this page does not cover

This page is about where the entity lives and what it costs to hold and move. How creditors reach a member’s interest, the constitutional homestead, and the charging order are on the protection page. The 2021 uniform act, its fiduciary floor, and the sweep of older LLCs are on the governance page. The $45 formation fee and the $150 franchise tax due every May 1 are on the filing page.

Last verified August 2026.