Arkansas tipped wage and tips tax calculator
Arkansas pairs an $11.00 minimum with a $2.63 cash wage — an $8.37 tip credit — and its income tax gives tips no special treatment, so the federal deduction is the only break.
The $2.63 floor and the employer’s records
The Arkansas minimum wage rules (Part 11) allow the tip credit to vary from week to week, but “at least two dollars and sixty-three cents ($2.63) per hour” must be paid in wages other than gratuities. Employers using the credit must keep records of each tipped employee’s reported tips and of the amount by which wages were treated as increased by tips. The Department of Labor and Licensing states the result plainly: if tips do not bring pay up to $11.00 an hour, the employer must add the difference.
Arkansas figures
| Cash wage / minimum | $2.63 / $11.00 |
|---|---|
| In force | July 1, 2026 |
| Next change | none scheduled |
| Tipped threshold | Not specified |
| Tips on the 2025 return | tips stay taxable in this state. The 2025 AR1000F instructions contain no exclusion for qualified tips; tips reported as wages are Arkansas income. Source: Arkansas Department of Finance and Administration |
| Tips on the 2026 return | tips stay taxable in this state. No Arkansas tips exclusion had been enacted when we checked. Source: Arkansas Department of Finance and Administration |
State income tax
Arkansas computes its own gross income rather than starting from a federal line, and the 2025 AR1000F instructions include no exclusion for qualified tips. Tips your employer reports are treated as wages for Arkansas withholding, so they are taxed on the state return even in the years the IRS lets you deduct them.
A slow week in Little Rock
$14,000 of tips with $18,000 of other income produce a $14,000 federal deduction and $1,470 of federal savings; Arkansas still taxes all of it. In a 28-hour week with only $90 of tips, the $2.63 cash wage ($74) plus tips falls short of $308, so the employer owes $144.
Check whether an Arkansas employer owes make-up pay
Where these figures come from
- Arkansas Department of Finance and Administration · Arkansas Department of Labor and Licensing
- 2025 AR1000F/AR1000NR instructions (2025)
- Minimum Wages for Tipped Employees (table by state) (2026-07-01)
- Minimum Wage (2026)
Federal rules: how the deduction works. Nearby: Missouri, Tennessee, Mississippi, Louisiana, Texas, Oklahoma.
Figures verified against primary sources on