State guide · Arkansas · 2026 rules

S corporation in Arkansas: what the election changes

Arkansas adds little to the S-corp math. Your LLC keeps its franchise tax, and the election puts your salary under unemployment tax.

Updated October 24, 202611 official sources

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You’ll need: last year’s Schedule C (line 31) and the W-2 from any job you also hold. Everything else starts at a typical value you can change.

State where the business is Each state treats the election differently. The check shows only the questions that matter there.

Net profit for the year, before paying yourself Your business's profit after expenses. Money you take out for yourself does not lower it.

Where do I find this?

Schedule C, line 31 (“Net profit or (loss)”) on last year’s return.

For this year: sales minus business expenses so far, scaled to a full year. Owner draws are not an expense.

Salary you would pay yourself as an S corporation What you would pay yourself through payroll. The IRS expects a reasonable salary for the work you do.

Where do I find this?

No form shows this yet: you choose it. It should be about what you would pay someone else to do your work.

The salary finder just below shows what employees in your job earn in your state or metro area. What the IRS looks at.

Salary finder: what people in your job earn (BLS)

Your job Pick the job closest to what you do most of the week.

Area Pick your metro area if it is listed. Pay varies by area.

Another job I also earn W-2 wages from a job outside this business

Typical values: change them if you know yours

Payroll service, per year typical value Published one-person prices: $492 to $684 a year (October 2026).

Where do I find this?

Your payroll provider’s price page or quote, for one employee: you. Published prices compared.

Extra tax-prep cost for the S-corp return typical value A survey average: the fee for Form 1120-S minus the fee for Schedule C (2020 fees).

Where do I find this?

Ask your preparer what a Form 1120-S (the S corporation’s own return) would cost, then subtract what you pay now for Schedule C.

Your top federal income tax rate Not sure? Keep 22%. It changes line 5 only.

Where do I find this?

Your taxable income is on Form 1040, line 15. Find the rate for that income and your filing status in the IRS rates and brackets table.

Filing status Changes the result only above $200,000 of earnings ($250,000 if married filing jointly, $125,000 if married filing separately).

Where do I find this?

The box checked under Filing Status at the top of your Form 1040.

Choose a state and enter your profit and salary to see the comparison.

The state

Arkansas follows the federal S election with no state form. The S corporation files Form AR1100S and pays no Arkansas income tax on its own; you report its income on your Arkansas return, as you do today.

An LLC that elects stays an LLC with the Secretary of State and keeps paying the flat $150 annual franchise tax, due May 1.

Unemployment tax on your salary

Unemployment insurance: 2.0% for a new employer on the first $7,000 of wages in 2026. That rate is 1.9% plus a 0.1% administrative assessment. Arkansas treats corporate officers, including officers of closely held corporations, as employees.

The optional pass-through entity tax

A one-owner S corporation can elect Arkansas’ pass-through entity tax, 3.7% for 2026. It elects each year on Form AR362, or by registering for the tax, before the return’s due date. You then leave that income out of your own Arkansas return. The calculator leaves it out.

Worked examples

A single-member LLC owner, single filer, 22% federal bracket, default payroll and return costs. The figure is total tax and added costs as an S corporation compared with staying as you are.

Profit / salary	No local tax
$80,000 / $45,000	$820 lower
$120,000 / $60,000	$3,221 lower
$200,000 / $90,000	$8,001 lower

Starting payroll in Arkansas

Register for state withholding with the Department of Finance and Administration through ATAP, and for unemployment insurance with the Arkansas Division of Reemployment through its Tax21 portal.

New hire paperwork for Arkansas

Other states

All state guides and the map

Sources

Federal figures: IRS Publication 15 (2026), Schedule SE and Form 2553 instructions. Every figure was read on an official page and checked a second time. Checked October 24, 2026. How we check facts.

An estimate from public rules, not tax advice.

Ready to elect? See the Form 2553 steps.

Electing S corp status