# Ark. Code Ann. § 26-51-403: Income generally > Arkansas · Statutes · In force URL: https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-403 ## Section - **Citation:** Ark. Code Ann. § 26-51-403 - **Heading:** Income generally - **Jurisdiction:** Arkansas - **Kind:** Statutes - **Status:** In force - **Text as of:** August 14, 2026 - **Source:** Compiled text - **Location:** AR Code / Title 26 / Chapter 51 / Subchapter 4 / Section 26-51-403 ## Text (a) The term "net income" means the adjusted gross income of a taxpayer less the deductions allowed by the Income Tax Act of 1929, § 26-51-101 et seq. (b) "Adjusted gross income" means, in the case of an individual, gross income minus the following deductions: (1) Trade and business deductions otherwise allowable as deductions under this chapter that are attributable to a trade or business carried on by the taxpayer if the trade or business does not consist of the performance of services by the taxpayer as an employee; (2) Trade and business deductions of employees otherwise allowable as deductions under this chapter; (3) Deductions that consist of expenses paid or incurred by the taxpayer in connection with the performance by him or her of services as an employee under a reimbursement or other expense allowance arrangement with his or her employer; (4) Losses from the sale or exchange of property; (5) Deductions attributable to property held for the production of rents and royalties; (6) (A) Certain deductions of life tenants and income beneficiaries of property. (B) In the case of a life tenant of property, an income beneficiary of property held in trust, or an heir, legatee, or devisee of an estate, the deduction for depreciation allowed by 26 U.S.C. § 167 , as provided in § 26-51-428 , and the deduction allowed by 26 U.S.C. § 611 , as provided in § 26-51-429 ; (7) Deductions for certain portions of lump-sum distributions from pension plans taxed under 26 U.S.C. § 402(e) , as set forth in § 26-51-414 ; (8) Deductions for moving expenses, as set forth in § 26-51-423(a)(4) ; (9) Deductions for alimony payments; (10) Deductions for separate maintenance payments; (11) Deductions for interest forfeited to a bank, savings association, et cetera, on premature withdrawals from time savings accounts or deposits; (12) Deductions allowed for cash payments to individual retirement accounts and deductions allowed for cash payments to retirement savings plans of certain married individuals to cover a nonworking spouse; (13) Deductions for contributions by self-employed persons to pension, profit-sharing, and annuity plans; (14) The border city exemption as provided by § 26-52-601 et seq.; (15) Deductions for the health insurance costs of self-employed persons as computed in accordance with § 26-51-423(c) ; (16) Deductions for contributions to a long-term intergenerational trust created pursuant to the Long-Term Intergenerational Security Act of 1995, § 28-72-501 et seq.; and (17) Deductions for contributions to the Arkansas Brighter Future Fund Plan not to exceed five thousand dollars ($5,000) per taxpayer under § 6-84-111(b) . (c) (1) The net income shall be computed upon the basis of the taxpayer's annual accounting period, either fiscal or calendar year, in accordance with the method of accounting regularly employed in keeping the books of the taxpayer. (2) If no such method of accounting has been employed or if the method employed does not clearly reflect the income, the computation shall be made upon such basis and in such manner as in the opinion of the Secretary of the Department of Finance and Administration does clearly reflect the income. (3) If the taxpayer's annual accounting period is other than a fiscal year as defined by the Income Tax Act of 1929, § 26-51-101 et seq., or he or she has no annual accounting period, or does not keep books, the net income shall be computed upon the basis of the calendar year. Amended by Act 2021, No. 966,§ 25, eff. 7/28/2021. Amended by Act 2019, No. 910,§ 3711, eff. 7/1/2019. Acts 1929, No. 118, Art. 3, § 7; Pope's Dig., § 14030; Acts 1969, No. 236, § 2; 1973, No. 182, § 4; A.S.A. 1947, § 84-2007; Acts 1987, No. 382, §§ 5, 6; 1989, No. 826, § 17; 1991, No. 685, § 1; 1993, No. 785, § 19; 1995, No. 1160, § 7; 1997, No. 1345, § 1; 2005, No. 1973, § 2. the calendar year. Amended by Act 2021, No. 966,§ 25, eff. 7/28/2021. Amended by Act 2019, No. 910,§ 3711, eff. 7/1/2019. Acts 1929, No. 118, Art. 3, § 7; Pope's Dig., § 14030; Acts 1969, No. 236, § 2; 1973, No. 182, § 4; A.S.A. 1947, § 84-2007; Acts 1987, No. 382, §§ 5, 6; 1989, No. 826, § 17; 1991, No. 685, § 1; 1993, No. 785, § 19; 1995, No. 1160, § 7; 1997, No. 1345, § 1; 2005, No. 1973, § 2. (a) The term "net income" means the adjusted gross income of a taxpayer less the deductions allowed by the Income Tax Act of 1929, § 26-51-101 et seq. (b) "Adjusted gross income" means, in the case of an individual, gross income minus the following deductions: (1) Trade and business deductions otherwise allowable as deductions under this chapter that are attributable to a trade or business carried on by the taxpayer if the trade or business does not consist of the performance of services by the taxpayer as an employee; (2) Trade and business deductions of employees otherwise allowable as deductions under this chapter; (3) Deductions that consist of expenses paid or incurred by the taxpayer in connection with the performance by him or her of services as an employee under a reimbursement or other expense allowance arrangement with his or her employer; (4) Losses from the sale or exchange of property; (5) Deductions attributable to property held for the production of rents and royalties; (6) (A) Certain deductions of life tenants and income beneficiaries of property. (B) In the case of a life tenant of property, an income beneficiary of property held in trust, or an heir, legatee, or devisee of an estate, the deduction for depreciation allowed by 26 U.S.C. § 167 , as provided in § 26-51-428 , and the deduction allowed by 26 U.S.C. § 611 , as provided in § 26-51-429 ; (7) Deductions for certain portions of lump-sum distributions from pension plans taxed under 26 U.S.C. § 402(e) , as set forth in § 26-51-414 ; (8) Deductions for moving expenses, as set forth in § 26-51-423(a)(4) ; (9) Deductions for alimony payments; (10) Deductions for separate maintenance payments; (11) Deductions for interest forfeited to a bank, savings association, et cetera, on premature withdrawals from time savings accounts or deposits; (12) Deductions allowed for cash payments to individual retirement accounts and deductions allowed for cash payments to retirement savings plans of certain married individuals to cover a nonworking spouse; (13) Deductions for contributions by self-employed persons to pension, profit-sharing, and annuity plans; (14) The border city exemption as provided by § 26-52-601 et seq.; (15) Deductions for the health insurance costs of self-employed persons as computed in accordance with § 26-51-423(c) ; (16) Deductions for contributions to a long-term intergenerational trust created pursuant to the Long-Term Intergenerational Security Act of 1995, § 28-72-501 et seq.; and (17) Deductions for contributions to the Arkansas Brighter Future Fund Plan not to exceed five thousand dollars ($5,000) per taxpayer under § 6-84-111(b) . (1) Trade and business deductions otherwise allowable as deductions under this chapter that are attributable to a trade or business carried on by the taxpayer if the trade or business does not consist of the performance of services by the taxpayer as an employee; (2) Trade and business deductions of employees otherwise allowable as deductions under this chapter; (3) Deductions that consist of expenses paid or incurred by the taxpayer in connection with the performance by him or her of services as an employee under a reimbursement or other expense allowance arrangement with his or her employer; (4) Losses from the sale or exchange of property; (5) Deductions attributable to property held for the production of rents and royalties; ons under this chapter; (3) Deductions that consist of expenses paid or incurred by the taxpayer in connection with the performance by him or her of services as an employee under a reimbursement or other expense allowance arrangement with his or her employer; (4) Losses from the sale or exchange of property; (5) Deductions attributable to property held for the production of rents and royalties; (6) (A) Certain deductions of life tenants and income beneficiaries of property. (B) In the case of a life tenant of property, an income beneficiary of property held in trust, or an heir, legatee, or devisee of an estate, the deduction for depreciation allowed by 26 U.S.C. § 167 , as provided in § 26-51-428 , and the deduction allowed by 26 U.S.C. § 611 , as provided in § 26-51-429 ; (A) Certain deductions of life tenants and income beneficiaries of property. (B) In the case of a life tenant of property, an income beneficiary of property held in trust, or an heir, legatee, or devisee of an estate, the deduction for depreciation allowed by 26 U.S.C. § 167 , as provided in § 26-51-428 , and the deduction allowed by 26 U.S.C. § 611 , as provided in § 26-51-429 ; (7) Deductions for certain portions of lump-sum distributions from pension plans taxed under 26 U.S.C. § 402(e) , as set forth in § 26-51-414 ; (8) Deductions for moving expenses, as set forth in § 26-51-423(a)(4) ; (9) Deductions for alimony payments; (10) Deductions for separate maintenance payments; (11) Deductions for interest forfeited to a bank, savings association, et cetera, on premature withdrawals from time savings accounts or deposits; (12) Deductions allowed for cash payments to individual retirement accounts and deductions allowed for cash payments to retirement savings plans of certain married individuals to cover a nonworking spouse; (13) Deductions for contributions by self-employed persons to pension, profit-sharing, and annuity plans; (14) The border city exemption as provided by § 26-52-601 et seq.; (15) Deductions for the health insurance costs of self-employed persons as computed in accordance with § 26-51-423(c) ; (16) Deductions for contributions to a long-term intergenerational trust created pursuant to the Long-Term Intergenerational Security Act of 1995, § 28-72-501 et seq.; and (17) Deductions for contributions to the Arkansas Brighter Future Fund Plan not to exceed five thousand dollars ($5,000) per taxpayer under § 6-84-111(b) . (c) (1) The net income shall be computed upon the basis of the taxpayer's annual accounting period, either fiscal or calendar year, in accordance with the method of accounting regularly employed in keeping the books of the taxpayer. (2) If no such method of accounting has been employed or if the method employed does not clearly reflect the income, the computation shall be made upon such basis and in such manner as in the opinion of the Secretary of the Department of Finance and Administration does clearly reflect the income. (3) If the taxpayer's annual accounting period is other than a fiscal year as defined by the Income Tax Act of 1929, § 26-51-101 et seq., or he or she has no annual accounting period, or does not keep books, the net income shall be computed upon the basis of the calendar year. (1) The net income shall be computed upon the basis of the taxpayer's annual accounting period, either fiscal or calendar year, in accordance with the method of accounting regularly employed in keeping the books of the taxpayer. (2) If no such method of accounting has been employed or if the method employed does not clearly reflect the income, the computation shall be made upon such basis and in such manner as in the opinion of the Secretary of the Department of Finance and Administration does clearly reflect the income. in accordance with the method of accounting regularly employed in keeping the books of the taxpayer. (2) If no such method of accounting has been employed or if the method employed does not clearly reflect the income, the computation shall be made upon such basis and in such manner as in the opinion of the Secretary of the Department of Finance and Administration does clearly reflect the income. (3) If the taxpayer's annual accounting period is other than a fiscal year as defined by the Income Tax Act of 1929, § 26-51-101 et seq., or he or she has no annual accounting period, or does not keep books, the net income shall be computed upon the basis of the calendar year. Amended by Act 2021, No. 966,§ 25, eff. 7/28/2021. Amended by Act 2019, No. 910,§ 3711, eff. 7/1/2019. Acts 1929, No. 118, Art. 3, § 7; Pope's Dig., § 14030; Acts 1969, No. 236, § 2; 1973, No. 182, § 4; A.S.A. 1947, § 84-2007; Acts 1987, No. 382, §§ 5, 6; 1989, No. 826, § 17; 1991, No. 685, § 1; 1993, No. 785, § 19; 1995, No. 1160, § 7; 1997, No. 1345, § 1; 2005, No. 1973, § 2. ## Nearby sections - [Ark. Code Ann. § 26-51-401 Tax year - Accounting method](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-401.md) - [Ark. Code Ann. § 26-51-402 Tax year - Basis for determining liability](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-402.md) - [Ark. Code Ann. § 26-51-403 Income generally](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-403.md) - [Ark. Code Ann. § 26-51-404 Gross income generally](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-404.md) - [Ark. Code Ann. § 26-51-405 Partnership income](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-405.md) - [Ark. Code Ann. § 26-51-406 Income to beneficiaries of trusts and estates](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-406.md) - [Ark. Code Ann. § 26-51-407 Financial institutions](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-407.md) - [Ark. Code Ann. § 26-51-408 Dividends of financial institutions taxable](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-408.md) - [Ark. Code Ann. § 26-51-409 Federal Subchapter S adopted](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-409.md) - [Ark. Code Ann. § 26-51-410 Inventory](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-410.md) - [Ark. Code Ann. § 26-51-411 Gain or loss - Sale of property](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-411.md) - [Ark. Code Ann. § 26-51-412 Gain or loss - Exchange of property](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-412.md) - [Ark. Code Ann. § 26-51-413 Corporate liquidations](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-413.md) - [Ark. Code Ann. § 26-51-414 Deferred compensation plans](https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-414.md) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/STATE_AR_T26_C51_S4_S26-51-403. Check the current official text before relying on it. Not legal advice.