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Arkansas Minimum Wage to Rise to $11 an hour

"Decreased income tax rates for Arkansas' top earners and an increased minimum wage are on the roster for new Arkansas laws in 2021.


The state's minimum wage will increase by $1 to $11 an hour on Jan. 1 as part of the stepped increases created by Act 182 that went into effect in January 2020. The Arkansas Minimum Wage Act covers employers with four or more employees.


Tipped employees: According to the Arkansas Department of Labor & Licensing, tipped employees must be paid at least $2.63 per hour and the tips they earn must be enough to bring them up to the applicable hourly minimum wage, the department's rules state.

"If the tips do not bring them up to minimum wage, the employer must add enough to their pay to do so," the Labor Department website noted. "It is the employer’s responsibility to keep accurate tip records."


Income rate decrease: Workers who earn more than $82,000 annually will see an income rate drop from 6.6% to 5.9%.


The decrease is the second phase of the most recent income tax cut that was proposed by Gov. Asa Hutchinson and passed by the Legislature in 2019. The top rate dropped from 6.9% to 6.6% on Jan. 1, 2020.


"Overall, 200,000 Arkansans will be affected by the drop to 5.9%," said Scott Hardin, spokesperson for the Arkansas Department of Finance and Administration.


In 2021, personal income tax rates for those making less than $22,200 per year will range from zero to 3.4% in the following increments: no tax on earnings up to $4,499; 2% for earnings between $4,500 and $8,899; 3% for earnings between $8,900 and $13,399; 3.4% for earnings between $13,400 to $22,199.


Since 2015, three major income tax cuts have been implemented, Hardin said. A cut for middle-income earners took place in 2015 with a low-income cut in 2017.


"Overall, these three cuts put $250 million back into the pockets of Arkansans and impact 1.3 million taxpayers," Hardin wrote.


There has been discussion among Arkansas legislators of having another decrease from 5.9% to either 5.5% or 5%, as well as possibly omitting income tax for the lower earners, but no decisions have been made yet.


General Assembly reconvenes: On Jan. 11, a regular session of the state Legislature will begin. The General Assembly by law convenes at noon on the second Monday in January of an odd-numbered year.


During the first few months of the year, legislators will have deadlines to meet if they wish to submit legislation, amendments, and bills. On Jan. 25, for example, retirement and health care legislation bills are due. Arkansas Code states any legislation that affects publicly reported retirement systems or pension plans needs to be introduced during the first 15 days of the regular session.


Constitutional amendment filings are due by Feb. 10."


 



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