Short-Term Rental Taxes in Arkansas: What Investors Need to Know in 2025
2–4.9% graduated income tax (top rate at ~$87K) | Conforms to federal bonus depreciation | 6.5% state sales tax on rentals | Top markets: Ozark Mountains, Hot Springs, Eureka Springs, Bentonville, Buffalo National River corridor
Arkansas is an underappreciated STR market with strong fundamentals in outdoor recreation, hot springs, and mountain regions. The Ozark Mountains, Buffalo National River corridor, and the resort town of Hot Springs anchor a diverse STR landscape. The state's conformity to federal bonus depreciation and a modest 4.9% top income tax rate create a favorable tax environment for Arkansas STR investors.
Arkansas State Income Tax
Arkansas has a graduated income tax structure that has been reduced in recent years, with the top rate now at 4.9% — applying to income over approximately $87,000. Arkansas conforms to federal tax definitions, meaning net rental income from Schedule E flows into Arkansas taxable income after the same deductions — including federal bonus depreciation — are applied.
Arkansas Sales and Tourism Taxes on STRs
| Market / Jurisdiction | State Sales Tax | Local/Tourism Tax | Estimated Total |
|---|---|---|---|
| Hot Springs (Garland County) | 6.5% | 3–4% | ~9.5–10.5% |
| Eureka Springs (Carroll County) | 6.5% | 4–5% | ~10.5–11.5% |
| Fayetteville (Washington County) | 6.5% | 2–3% | ~8.5–9.5% |
| Bentonville (Benton County) | 6.5% | 2% | ~8.5% |
| Mountain Home (Baxter County) | 6.5% | 2% | ~8.5% |
| Jasper / Newton County (Buffalo River) | 6.5% | 1–2% | ~7.5–8.5% |
Top Arkansas STR Markets
Hot Springs: Arkansas's original resort town, built around the thermal springs of Hot Springs National Park. Hot Springs draws visitors for the national park, Bathhouse Row (historic spa district), horse racing at Oaklawn Park, and Lake Hamilton water recreation. Properties range from historic cottages to lakefront homes on Lake Hamilton. A year-round market with diverse demand drivers.
Eureka Springs: A Victorian-era mountain town in the Ozarks that has reinvented itself as an arts, entertainment, and weekend getaway destination. The city is compact and walkable, with strong STR demand from couples and groups visiting for music venues, craft breweries, and a distinctive Victorian character. Historic architecture creates interesting cost segregation dynamics for renovated properties.
Northwest Arkansas (Bentonville / Fayetteville): Bentonville, home to Walmart's global headquarters, generates corporate travel and executive relocation demand for furnished rentals. The Crystal Bridges Museum of American Art and the region's world-class mountain biking trail system (Oz Trails) draw significant leisure visitors. Fayetteville has University of Arkansas football weekend demand comparable to Oxford's Ole Miss pattern.
Buffalo National River Corridor: The Ozark Mountain wilderness along the Buffalo National River — America's first national river — draws outdoor recreationists, kayakers, and hikers. Rustic cabins along the river corridor can command premium rates during peak floating season (April–June).
Cost Segregation in Arkansas
Arkansas STR properties in mountain and lakefront settings tend to have strong personal property ratios. Ozark Mountain cabins with hot tubs, decks, fire pits, and recreational amenities typically yield 20–30% of purchase price in 5-year and 15-year assets. At the 4.9% top Arkansas rate combined with federal savings at 32–37%, cost segregation generates compelling returns. A $400,000 Hot Springs lakefront property with $100,000 in cost seg deductions could yield $37,000–$41,900 in combined first-year savings.
Estimate Your Arkansas STR Tax Savings
Arkansas's full bonus dep conformity and 4.9% top rate create an attractive combined federal and state tax picture. Get your free cost seg estimate.
Get My Free Estimate