Tax cut effective this month

LITTLE ROCK — The Military Retirement Income Tax Cut, which Gov. Asa Hutchinson signed into law in February 2017, went into effect Jan. 1. The tax cut, which eliminates state income tax on military retirement pay, was one of Hutchinson’s priorities for the 2017 legislative session. The bill passed through the General Assembly with wide bipartisan support in both chambers.

Arkansas has now joined the majority of Southern states in exempting state income tax on military retirement pay. Hutchinson prioritized this initiative in an effort to recruit more military retirees to the state. This tax cut creates tax relief for Arkansas’ 22,000 military retirees and will encourage veterans to start their second careers in Arkansas. It is also important to note that many of these retirees are in their late 30s and early 40s. They will be starting second careers, opening businesses, buying homes and investing in Arkansas in other ways.

“These are exactly the type of individuals we want in the state of Arkansas, and this tax cut gives veterans one more reason to live here,” said Senate President Pro Tem Jonathan Dismang, R-Beebe.

Frequently asked questions regarding the Arkansas Military Retirement Income Tax Cut:

1. Who gets the tax break? Veterans who are receiving military retirement income qualify for the tax break.

2. Do survivors qualify? Yes. Surviving spouses and/or minor children who are receiving Survivor Benefit Pay qualify.

3. When does the tax break become effective? The tax break went into effect Jan. 1.

4. Will I see more money on my January check? No. The first adjustment will appear on the February checks of those who adjusted their state-income-tax withholding in January.

5. Will Defense Finance and Accounting automatically adjust my deductions? No. To adjust your state income-tax withholding, call DFAS at (800) 321-1080 or go to mypay.dfas.mil.

For answers to other questions, see a local income-tax preparer.