No more state grocery tax in Arkansas — but it’s not all good news

Arkansas ends its state grocery tax

Arkansas stopped charging its state-level sales tax on groceries on Jan. 1, 2026.

Gov. Sarah Huckabee Sanders signed the Grocery Tax Relief Act into law in April 2025, wiping out the last 0.125% state tax on food and food ingredients.

Rep. Kendon Underwood, a Republican from Cave Springs, sponsored the original bill. But don’t expect a tax-free grocery run just yet.

Local city and county taxes on food still apply, so shoppers will keep seeing sales tax on their receipts.

Savings add up slowly for families

On a $100 grocery bill, the state tax cut saves about 13 cents.

That’s not much per trip, but the Governor’s Office says it adds up to roughly $11 million a year across the state.

For families shopping every week, seniors on fixed incomes, and households stretching tight budgets, those small amounts build over time.

Some shoppers have questioned whether they’ll even notice the difference on a single receipt. The answer depends on how often you shop and how much you spend.

Local taxes still show up at checkout

The state tax is gone, but local governments still charge their own sales taxes on groceries. In West Memphis, that rate is 4%.

In Little Rock, shoppers pay about 2.125% in combined city and county taxes. Across Arkansas, local governments collect roughly $264 million a year from grocery sales taxes.

So the amount you pay at the register depends entirely on where you live and shop. Two families buying the same cart of food can pay very different tax bills.

Some foods still get taxed

The new law covers food and food ingredients sold for home use, things like meat, produce, bread, and dairy. But prepared meals, the kind you can eat right away, still get hit with the full state and local tax rates.

Candy and soft drinks also don’t qualify for the break.

A simple way to think about it: if you could buy it with SNAP benefits, the state tax exemption probably covers it. Everything else stays taxed as usual.

Arkansas cut this tax over nearly 20 years

Arkansas used to tax groceries at the same rate as everything else.

That started changing in 2007, when then-Gov. Mike Beebe signed a law cutting the grocery tax from 6% to 3%. The rate dropped to 2% in 2009 and then 1.5% in 2011.

In 2013, Beebe signed another law that set conditions for a further cut to 0.125%. That tiny rate kicked in during January 2019 and stayed in place until the full elimination this year.

Conservation programs lose some funding

That 0.125% grocery tax had a specific purpose. It tied back to Amendment 75 of the Arkansas Constitution, which voters passed in 1996 to fund conservation.

Revenue from the tax went to the Arkansas Game and Fish Commission, State Parks, the Heritage Commission, and Keep Arkansas Beautiful.

The state projects the grocery tax cut will reduce conservation funding by about $4.28 million in fiscal 2026. State officials said the affected agencies knew in advance and can handle the budget change.

Other states are making similar moves

Arkansas isn’t alone. Illinois also got rid of its 1% state grocery tax on Jan. 1, 2026.

Kansas fully removed its grocery tax at the start of 2025 after phasing it down over several years. Alabama cut its state grocery tax from 3% to 2% in September 2025.

Mississippi dropped its rate from 7% to 5% in mid-2025, with more cuts planned through 2036. Across the country, states are moving away from taxing food at the checkout line.

About 10 states still tax groceries

As of early 2026, roughly 10 states still charge some form of state-level tax on groceries. Four states tax food at their full sales tax rate: Hawaii, Idaho, Mississippi, and South Dakota.

Four others charge a lower rate: Alabama, Missouri, Tennessee, and Utah. Some, like Idaho and Hawaii, offer tax credits to help lower-income residents offset the cost.

Virginia lawmakers were also looking at a bill to repeal their state’s 1% grocery tax in early 2026.

Grocery taxes hit lower-income families hardest

Grocery taxes are often called regressive because they take a bigger bite out of smaller paychecks.

Everyone buys food no matter what they earn, so the tax hits all families in the same dollar amount, but that same amount means a lot more to someone making $30,000 than someone making $100,000.

Sanders called it Arkansas’s most regressive tax when she pushed for its removal. Experts note the state cut helps, but local taxes in many areas still add to food costs.

Border towns could attract neighboring shoppers

Arkansas shoppers near state lines may now pay less on groceries than their neighbors. Tennessee still charges a 4% state tax on food.

Mississippi’s rate sits at 5% as of mid-2025, down from 7%. That price gap could push some shoppers across the border to buy groceries in Arkansas.

West Memphis, right on the Tennessee line, is one city that could see more cross-state traffic at its grocery stores as a result.

Stores updated their systems on Jan. 1

Retailers across the state had to update their checkout systems to remove the state grocery tax before Jan. 1, 2026. The state Department of Finance and Administration said about 4,200 business accounts needed changes.

If a store still appears to charge state tax on qualifying food items, shoppers can reach out to the Arkansas Department of Finance and Administration.

The general state sales tax rate of 6.5% still applies to most non-food purchases, so those charges on your receipt are normal.

Other new laws also ease costs

The grocery tax cut is one of several Arkansas laws that took effect Jan. 1, 2026. Another new law raised the homestead property tax credit for homeowners to up to $600 per property.

The state also opted into the federal Summer EBT program, which gave benefits to about 260,000 Arkansans in its first year.

Together, these changes aim to lower everyday costs for working families and seniors across the state.

This article was created with AI assistance and human editing.

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