Arkansas Pass-Through Entity Tax (PTET)
Arkansas's PTET regime is one of the 37+ state workarounds to the federal SALT cap (IRC §164(b)(6)). The election is annual, statute-pinned below, and interacts with composite filing and §199A QBI in state-specific ways.
- Statute
- Ark. Code Title 26, Chapter 65 (Elective Pass-Through Entity Tax); Act 362 of 2021; Act 532 of 2023
- State DOR portal
- https://www.dfa.arkansas.gov/office/taxes/income-tax-administration/pass-through-entity-tax/
- Election deadline
- PTE tax due on or before the 15th day of the 4th month after end of taxable year (April 15 for calendar-year filers). Election made by members holding 50% or more of the PTE.
- Election form
- Form AR1100PET (Pass-Through Entity Tax Return)
- Entity-level rate
- 3.90% — AR DFA AR1100PET 2024 Instructions (PET rate = highest individual rate; 2024 onward = 3.9%) + AR DFA Withholding Tax Formula Method Effective 01/01/2026 (top bracket 3.90%)
- Eligible entities
- s-corp, partnership, llc-as-s, llc-as-partnership
- Owner credit
- refundable
- Composite interaction
- stacks
- §199A QBI base reduction
- Yes — Reduces federal flow-through income (Notice 2020-75).
- Last verified
- 2026-05-12
Source: dfa.arkansas.gov/office/taxes/income-tax-administration/pass-through-entity-tax/ + 2024 AR1100PET instructions. AR has cut individual income tax rates multiple times since 2023; verify 2026 effective rate.
Reference computation
For a Arkansas pass-through entity with $500,000 of qualified net income allocated to this state, at a 37% federal marginal bracket, the entity-level PTET and federal-deduction math is:
At a 37% federal bracket, the entity-level deduction saves $7,215 in federal tax. Net of §199A QBI offset (~20% × bracket × entity tax = $1,443), aggregate benefit is approximately $5,772.
Election walkthrough
- Verify eligibility. Arkansas accepts: s-corp, partnership, llc-as-s, llc-as-partnership.
- Check the deadline. PTE tax due on or before the 15th day of the 4th month after end of taxable year (April 15 for calendar-year filers). Election made by members holding 50% or more of the PTE. Act 532 of 2023 reduced rate effective for tax years beginning 2023 and after.
- Compute the entity-level tax. Apply the 3.90% rate to qualified net income.
- Pay and file. Use Form AR1100PET (Pass-Through Entity Tax Return). Quarterly estimates may be required.
- Owners claim the state credit. refundable credit on the personal state return.
- Verify composite interaction. Composite interaction: stacks. See composite vs PTET.
- Run the federal §199A QBI math. PTET reduces the QBI base proportionally; net the federal SALT-arbitrage against the §199A offset.
Arkansas PTET — common questions
State PTET law revises annually. Arkansas's data was last verified on 2026-05-12. Re-confirm with the state DOR primary source before electing or filing. Last full-site review: 2026-05-12.