Does Arkansas follow the federal no-tax-on-tips and overtime deductions?
DOES NOT CONFORM
Arkansas does not follow the federal deductions for state income tax. You can still claim the tips and overtime deductions on your federal return (Schedule 1-A) — they simply do not reduce your Arkansas state tax. Do not assume your state return treats this income the way your federal return does.
Verified against the official state source below — last verified October 26, 2026
| Deduction | Arkansas position |
|---|---|
| Federal tips deduction (IRC §224) | Does not conform |
| Federal overtime deduction (IRC §225) | Does not conform |
What the state itself says
"Such tips are considered wages and subject to State income tax withholding."
- Official source
- Arkansas DFA, "2025 AR1000F and AR1000NR Instructions" ; "2026 Withholding Tax Instructions"
- Tax years covered
- 2025 returns; 2026 withholding.
Arkansas computes tax from its own income lines (wages, salaries and tips entered in full), not from federal taxable income; the complete 2025 booklet contains no "overtime" and no Schedule 1-A reference, and no OBBBA-specific DFA guidance was located. Basis: official form/instruction structure.
Your federal deduction is separate
Whatever your state does, the federal deductions run on their own rules: check your W-2 codes with the W-2 Code Checker, estimate with the Tips Calculator and Overtime Calculator, and see the glossary for any term. All state positions: the state-by-state index.
State position verified October 26, 2026 from the official source above. State guidance changes; confirm on the source before filing. This page is general information, not tax advice.