Is my retirement income (pension) taxable to Arkansas?

Arkansas allows you take a subtraction for your pension income for up to $6,000 on your state return. If you are filing as married filing jointly and your spouse receives a pension as well, you are both entitled to a $6,000 exemption on your Arkansas return for your pension income.

The program will not automatically calculate the exemption for you, you will have to make a manual entry within the state section. 

Resident Return Program Entry

1. State Section
2. Edit Arkansas state return
3. Subtractions from Income
4. Pension Exclusion
5. Enter the amounts for both the gross distribution and the taxable amount 
6. The program will then apply the exemption amount (remaining taxable income amounts will show on line 18A, 18B)

Nonresident/Part-Year Resident Return Program Entry

Nonresident and Part-Year resident returns do not automatically pull the retirement income to the return. The income must be manually added and subtracted from the return. 

1. State Section
2. Edit/Add the Arkansas Nonresident return.
3. Income Subject to Tax.  Make an entry for either 'Enter the Arkansas portions of IRA Distributions' or “Enter the Arkansas portion of Pensions and Annuities” Depending on your type of retirement. This will pull to line 16 Column C or line 18A Column C.
4. Subtractions from Income.
5. Pension Exclusion. You will need to enter who the pension belongs to and then complete the sections for your pension exclusions. You will need to enter both the gross distributions (Line 18A Gross) and the taxable portion (line 18A Taxable) of the pension. The program will figure the amount for 18A column A. Complete for both taxpayer and spouse (If applicable).

Please note:

1. In the Subtractions from Income section, the federal amount is displayed in yellow for you to reference.
2. Arkansas Line 16 is for nonqualified IRA distributions and taxable annuities. Line 18 is for Pension. The difference in these two lines depends on the 1099-R entry for box 7 (if the box is checked for IRA/SIMPLE/ SEP). Checked= line 16. Unchecked = line 18.
3. You cannot claim both the retirement income exemption and "65 Special" Tax Credit on your Arkansas state return. You must decide to use one or the other.

See also Is my military pension/retirement income taxable to Arkansas?