Arkansas governor calls Legislature back to session to cut income taxes

Arkansas Gov. Sarah Huckabee Sanders called the Legislature back to Little Rock for a long-expected special session next week to cut income taxes Thursday, one day after lawmakers concluded their work on this year’s budget.

The Legislature will convene for the session on Monday.

The Republican governor wrote in her proclamation scheduling the session that Arkansas’ “financial stability, increased economic growth, healthy reserve accounts, and conservative spending policies” meant that the top tax rates for individuals and businesses could be lowered.

Sanders listed the purpose of the session as cutting the top individual income tax rate to 3.7% from 3.9%, retroactive to Jan. 1, and the corporate tax rate to 4.1%, which would not be retroactive.

Sanders issued the proclamation the day after lawmakers adjourned this year’s fiscal session. Unlike regular sessions, held in odd-numbered years, fiscal sessions focus on the budget rather than a broader range of issues. 

Calling an “extraordinary session” of the Legislature is a power granted to the governor by the Arkansas Constitution. Special sessions differ from regular and fiscal sessions because they allow the governor to set the agenda and limits on what lawmakers can consider. 

In this case, the Legislature can only consider measures cutting income taxes, though it may extend the special session by up to 15 days and consider other unrelated legislation once the tax cuts have been considered. A special session can last a minimum of three days.

Republican House Speaker Brian Evans of Cabot said he didn’t expect legislation beyond the tax cut measures, saying the session will be “quick and efficient” and that members of his party were supportive of the cuts. 

Republicans hold 79 of the 100 seats in the House and 29 of 35 seats in the Senate. The tax cut legislation will require 51 votes in the House and 18 in the Senate for approval.

“We have a lot of members that have started working on policy that affects their constituents back in their districts, but I think they’re preparing to work on that for the general session in 2027,” Evans said.

More tax cuts have been expected since Sanders’ State of the State address earlier this month, when she vowed to call a special session if lawmakers approved her proposed budget. 

Should the tax cuts pass, it would be the fourth time the Legislature cut the top tax bracket since Sanders took office in 2023.

Senate Minority Leader Greg Leding, a Democrat from Fayetteville, and his counterpart in the House, Minority Leader Andrew Collins of Little Rock, both said there was little chance the cuts didn’t pass. But Leding said bipartisan concerns about spending priorities and sustainability remain.

While Sanders has touted the tax cut as returning more money to the pockets of Arkansans, Leding and Collins said the cut to the top tax rate, which applies to income in excess of $25,700, wouldn’t provide much benefit to most working families.

“If they do, it might be enough to cover part of one month’s phone bill,” Leding said.

The Legislature gave final approval Wednesday to a $6.7 billion budget for the fiscal year starting July 1.