Article: 50129

If you file taxes in Arkansas, you may be eligible for certain deductions or exemptions on your state income tax return. These can be claimed using Form AR1000ADJ, the Arkansas Adjustments Schedule. Below are four adjustments that may apply to you: Border City Exemption (Texarkana), Contributions to Intergenerational Trusts, Tax-Deferred Tuition Savings (529) Programs, and ABLE Account Contributions.

Texarkana Border City Exemption (Form AR-TX)

Residents of Texarkana, Arkansas are eligible for a full exemption from Arkansas income tax. If you’re a part-year resident, only the income earned while living in Texarkana qualifies for the exemption. Full-year Texarkana, Texas residents working in Arkansas may also be eligible.

The exemption is entered on Line 1 of Form AR1000ADJ and flows to Line 24 on Form AR1000F or AR1000NR.

Requirements

• You must report all Arkansas income on your return.
• Exempt income is then subtracted as an adjustment using Form AR1000ADJ.
• Attach Form AR-TX (provided by your employer) with your W-2.
• You must list a Texarkana street address (no PO Boxes) or the exemption won’t be allowed.

Contributions to Intergenerational Trusts

You can deduct contributions to a long-term Intergenerational Trust, a special retirement trust for a minor under age 18. Enter this amount on Line 7 of Form AR1000ADJ, which then carries to Line 24 of AR1000F or AR1000NR.

Requirements

The trustee must:

• Be an Arkansas resident.
• Not distribute funds to the minor until they are at least 55 years old.

Limitations

• You can deduct up to $4,000 per year.
• Contributions exceeding the limit are not carried forward.

Tax-Deferred Tuition Savings Program (529 Plans)

This includes contributions to the Arkansas Brighter Future 529 Plan, which helps families save for education expenses with tax advantages. Enter contributions on Line 2 of Form AR1000ADJ, and it will flow to Line 24 of AR1000F or AR1000NR.

Deduction Details

• Deduct up to $5,000 per individual for contributions to the Arkansas 529 Plan.
• Contributions exceeding $5,000 can be carried forward for up to four years.
• Rollovers from other states’ 529 plans are capped at $7,500 per taxpayer
• If contributing to an out-of-state plan (not deducted in that state), you may still claim a $3,000 deduction.

ABLE Account Contributions (Achieving a Better Life Experience)

The Arkansas ABLE program allows individuals with disabilities to save in tax-advantaged ABLE accounts without affecting SSI or Medicaid eligibility. Enter contributions on Line 18 of Form AR1000ADJ, and it will flow to Line 24 of AR1000F or AR1000NR.

Deduction Details

• Deduct up to $5,000 per year for contributions to an Arkansas ABLE account.
• Excess amounts above $5,000 can be carried forward for up to four years.

How to Report

To enter the above adjustments in 1040.com, follow these steps:

1. Go to the State Taxes section.
2. Select I’d like to see the forms I’ve filled out or search for a form.
3. Choose Arkansas.
4. Click the General tab, then open the Adjustments screen.
5. Find the relevant adjustment section (e.g., “Border City Exemption,” “ABLE Contributions,” etc.).
6. Enter your amount and click Save.

Additional Resources

• Arkansas AR1000ADJ Instructions
• Arkansas ABLE Program Info