Arkansas is one of the five cheapest states to live in, with a cost of living roughly 15% below the national average and median home prices under $200,000 in most cities. The state’s economy punches above its weight: Walmart (Bentonville), Tyson Foods (Springdale), J.B. Hunt (Lowell), and Dillard’s (Little Rock) are all headquartered here, and Northwest Arkansas has become a genuine boomtown with tech jobs, startup culture, and corporate relocations. The income tax is progressive (up to 3.9% after recent reform), and property taxes are among the lowest in the country. Little Rock and Fayetteville offer the strongest income-to-cost ratios, while Hot Springs and Jonesboro provide deep affordability for retirees and remote workers.
Arkansas at a Glance
| Metric | Value | National Rank |
|---|---|---|
| Population (2024) | 3.07 million | 34th |
| Median household income | $56,335 | 48th |
| Median home price | $205,000 | 4th lowest |
| Cost of living index | 87 | 5th lowest |
| State income tax | 2.0-3.9% | Below average |
| Sales tax (state + local avg) | 9.45% | 4th highest |
| Property tax (effective rate) | 0.62% | 12th lowest |
Income in Arkansas
Median Household Income by City
| City/Metro Area | Median Household Income | Cost of Living Index | Affordability Rating |
|---|---|---|---|
| Bentonville | $82,400 | 94 | Excellent |
| Fayetteville | $58,200 | 92 | Good |
| Rogers | $72,500 | 93 | Excellent |
| Little Rock | $55,800 | 88 | Good |
| Fort Smith | $48,200 | 80 | Good |
| Jonesboro | $49,400 | 82 | Good |
| Conway | $52,600 | 84 | Good |
| Hot Springs | $42,800 | 82 | Fair |
| Pine Bluff | $33,600 | 76 | Fair |
| Springdale | $56,400 | 90 | Good |
Housing in Arkansas
Home Prices by City
| City/Area | Median Home Price | Price per Sq Ft | Median Rent (2BR) | Price-to-Income |
|---|---|---|---|---|
| Bentonville | $365,000 | $180 | $1,400 | 4.4 |
| Rogers | $310,000 | $165 | $1,300 | 4.3 |
| Fayetteville | $320,000 | $170 | $1,200 | 5.5 |
| Little Rock | $215,000 | $115 | $1,000 | 3.9 |
| Conway | $225,000 | $120 | $950 | 4.3 |
| Fort Smith | $165,000 | $90 | $800 | 3.4 |
| Jonesboro | $185,000 | $100 | $850 | 3.7 |
| Hot Springs | $210,000 | $120 | $900 | 4.9 |
| Pine Bluff | $105,000 | $55 | $650 | 3.1 |
| State Average | $205,000 | $110 | $950 | 3.6 |
Taxes in Arkansas
Income Tax Brackets (2025)
| Taxable Income | Tax Rate |
|---|---|
| $0 – $5,099 | 2.0% |
| $5,100 – $10,299 | 3.0% |
| $10,300 – $24,299 | 3.4% |
| Over $24,300 | 3.9% |
Arkansas has been cutting its top rate progressively — from 6.9% in 2020 to 3.9% in 2025, with a target of 3.5% by 2027.
Total Tax Burden
| Gross Income | Federal Tax | AR Income Tax | FICA | Property Tax ($205K home) | Effective Rate |
|---|---|---|---|---|---|
| $50,000 | $3,962 | $1,496 | $3,825 | $1,271 | 21.1% |
| $75,000 | $8,115 | $2,471 | $5,738 | $1,271 | 23.5% |
| $100,000 | $13,615 | $3,446 | $7,650 | $1,271 | 26.0% |
Cost of Living Breakdown
| Category | Arkansas Index | National Average | Annual Savings vs National |
|---|---|---|---|
| Housing | 65 | 100 | $5,880 |
| Groceries | 92 | 100 | $400 |
| Transportation | 92 | 100 | $800 |
| Healthcare | 90 | 100 | $500 |
| Utilities | 92 | 100 | $320 |
| Overall | 87 | 100 | $7,900 |
Best Area: Northwest Arkansas
| Metric | NWA Corridor | Arkansas Average | National Average |
|---|---|---|---|
| Median household income | $72,500 | $56,335 | $80,610 |
| Median home price | $335,000 | $205,000 | $412,000 |
| Unemployment rate | 2.4% | 3.4% | 3.7% |
| Major employers | Walmart, Tyson, J.B. Hunt, Arvest | — | — |
| Population growth (5-year) | +12% | +2% | +3% |
| Cost of living index | 93 | 87 | 100 |
Arkansas Pros and Cons
| Financial Pros | Financial Cons |
|---|---|
| 5th lowest cost of living | 48th in median household income |
| Very affordable housing (median $205K) | High sales tax (9.45% avg) |
| Declining income tax (heading to 3.5%) | Limited high-paying job markets outside NWA |
| Low property taxes (0.62%) | Below-average healthcare access |
| No Social Security tax | Higher poverty rate than national average |
| NWA is a booming economic corridor | Rural areas have limited opportunities |
Related: Cost of Living by State | State Income Tax Rates | Property Tax by State | Average Rent by State | Income to Live Comfortably
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