STATE OF ARKANSAS                                                     REVENUE DIVISION 
                                                                                   Individual Income Tax 
                Department of Finance                                              th Withholding Branch 
                                                                               7  and Wolfe Streets, Room 1362 
                and Administration                                                    Post Office Box 8055 
                                                                               Little Rock, Arkansas 72203-8055 
                                                                                      Phone:  (501) 682-7290 
                                                                                            Fax:(501)683-1036 
                                                                                      http://www.state.ar.us/dfa 
                 
                               Texarkana Withholding Exemption Rules 
 
This is a brief explanation of the rules concerning the taxability of income earned from Arkansas sources while a 
resident of Texarkana, Arkansas or Texarkana, Texas. This exemption only applies if the taxpayer is living within 
the city limits of Texarkana, Arkansas or Texarkana, Texas. The exemption does not apply if the taxpayer lives on a 
rural route or in a town in the surrounding area of Texarkana. This supersedes any previous withholding rules. Any 
questions should be referred to the Arkansas Withholding Branch. 
 
                                    Texarkana, Arkansas Residents 
 
Arkansas residents whose permanent residence is within the city limits of Texarkana, Arkansas are exempt from 
Arkansas individual income taxes. All income received is exempt while the taxpayer is a resident of Texarkana, 
Arkansas. The taxpayer is required to file an Arkansas Individual Income Tax Return and submit all appropriate W-
2’s and schedules to support the income and deductions. The form AR-TX is also submitted with the tax return 
which reports the exempt amount of wages earned from a particular employer. 
 
Arkansas employers are not required to withhold Arkansas taxes on these employees as long as a form AR-TX is 
completed stating that the employee actually lives within the city limits of Texarkana, Arkansas and reports the 
amount of exempt wages.   This form is completed by the employer  and given to the employee to be filed with the 
Arkansas individual income tax return. A copy is also sent to the State Withholding Branch along with the state’s 
copy of W-2’s. 
 
Arkansas employers are required to withhold Arkansas taxes if the employee moves from Texarkana, Arkansas. 
The form AR-TX will then report only the exempt amount of wages (Those earned while a resident of Texarkana, 
Arkansas) 
 
                                       Texarkana, Texas Residents 
 
Texas residents whose permanent residence is within the city limits of Texarkana, Texas are exempt from 
Arkansas individual income taxes on income earned from businesses in Texarkana, Arkansas only. This is the only 
income that is exempt. Any income received from any other sources in Arkansas is fully taxable. The taxpayer is 
required to file an Arkansas Individual Income Tax Return and submit all appropriate W-2’s and schedules to 
support the income and deductions. The form AR-TX is also submitted with the tax return which reports the exempt 
amount of wages earned from a particular employer. 
 
Texarkana, Arkansas employers are not required to withhold Arkansas taxes on these employees as long as a form 
AR-TX is completed stating that the employee actually lives within the city limits of Texarkana, Texas and reports 
the amount of exempt wages. 
This form is completed by the employer and given to the employee to be filed with the Arkansas individual income 
tax return. A copy is also sent to the State Withholding Branch along with the State’s copy of W-2’s. 
 
Non-Texarkana, Arkansas employers must withhold Arkansas taxes on employees regardless of the fact that they 
live in Texarkana, Texas. 

                                    “EQUAL OPPORTUNITY EMPLOYER”