Side-by-side tax comparison between Arkansas (3.9% top rate, graduated) and Kentucky (3.5% top rate, flat). See which state lets you keep more at every salary level, and how cost of living changes the picture.
Arkansas uses a graduated income tax (2-3.9%) while Kentucky has a flat system (3.5% flat). On a $100K salary, Arkansas takes $2,535 in state and local taxes compared to Kentucky’s $3,500 \u2014 a difference of $965.
Because Arkansas has graduated brackets while Kentucky is flat, the gap between them changes at different income levels. Arkansas’s rates increase with income, so high earners feel the difference more acutely.
Kentucky also has local income taxes (estimated at $0/year on $100K), which Arkansas does not.
Arkansas wins at 10 out of 10 salary levels tested. The advantage exists but is modest across the income spectrum.
| Salary | Arkansas | Kentucky | Difference | Winner |
|---|---|---|---|---|
| $40K | $33,306 | $32,920 | −$386 | Arkansas |
| $50K | $41,088 | $40,605 | −$483 | Arkansas |
| $60K | $48,869 | $48,290 | −$579 | Arkansas |
| $75K | $59,636 | $58,913 | −$724 | Arkansas |
| $100K | $76,590 | $75,625 | −$965 | Arkansas |
| $120K | $90,153 | $88,995 | −$1,158 | Arkansas |
| $150K | $109,949 | $108,501 | −$1,448 | Arkansas |
| $200K | $143,817 | $141,887 | −$1,930 | Arkansas |
| $250K | $176,927 | $174,514 | −$2,413 | Arkansas |
| $300K | $207,724 | $204,829 | −$2,895 | Arkansas |
Take-home pay only tells part of the story. Arkansas has a cost of living index of 86 while Kentucky is at 90 (national average = 100).
With similar costs of living (86 vs 90), the tax difference is the primary factor. What you see in raw take-home pay is essentially what you get in purchasing power: $89,058 in Arkansas vs $84,028 in Kentucky.
For a single earner at $100K filing jointly, take-home becomes $82,175 in Arkansas and $81,210 in Kentucky \u2014 a difference of $965. The gap remains similar regardless of filing status.
On paper, moving from Kentucky to Arkansas would save $965/year on a $100K salary, or $4,825 over 5 years. But relocation involves real costs: moving expenses, potentially buying/selling a home, changing jobs, and adjusting to a new community.
At $965/year, the tax difference alone likely isn’t worth relocating for. Other factors — job market, lifestyle, family — should drive the decision. The tax savings are a nice bonus if you’re already considering the move for other reasons.