Arkansas Homestead Property Tax Credit

Quick Facts

• What it does: Arkansas automatically reduces the property tax bill on a qualifying homestead by up to $425 each year, funded through statewide sales tax revenues.
• Who qualifies: Any Arkansas homeowner who uses the property as their principal residence and registers the homestead with the county assessor. Manufactured home owners qualify if the home is real property.
• Why it matters: Property taxes support local schools and services, but the credit offsets a portion of the school district levy, helping homeowners manage annual expenses. Because the credit is statewide, every eligible homeowner should claim it to avoid overpaying.
• How the credit is applied: Once approved, the credit appears as a deduction on the tax bill under the school tax section. Mortgage servicers should adjust escrow payments to reflect the lower amount due.

Program Overview

Arkansas Constitution Amendment 79 created the homestead credit, requiring the state to pay $425 of the school tax portion of an eligible property’s tax bill. Counties administer applications, while the Department of Finance and Administration (DFA) reimburses school districts for the lost revenue. The credit applies to owner-occupied residences, including houses, condominiums, townhomes, and manufactured homes affixed to real property.

Homeowners must register their homestead with the county assessor to receive the credit. After registration, the credit continues automatically unless ownership or occupancy changes. The credit is applied per parcel, so multiple parcels (e.g., adjacent lots) may require separate applications if taxed individually.

Eligibility Details

• Principal residence: The property must be the homeowner’s principal place of residence. Vacation homes, second homes, and rental properties are ineligible.
• Ownership documentation: Provide a recorded deed, closing statement, or bill of sale (for manufactured homes) showing ownership. If the property is held in a revocable trust, submit trust documents demonstrating beneficial ownership.
• Residency proof: Counties often request an Arkansas driver’s license, voter registration, or utility bill listing the property address.
• Single credit rule: State law allows only one homestead credit per taxpayer. Couples jointly owning multiple homes must designate one property for the credit.

Application Process

1. Visit the county assessor: Applications are available at the assessor’s office or online in some counties. Forms typically require basic property information, parcel number, and certification of primary residence.
2. Provide documentation: Bring identification, proof of ownership, and residency documents. Some counties require notarized affidavits if applying by mail.
3. Submit by October 15: To ensure the credit appears on the following year’s tax bill, apply by October 15. Applications filed later may delay the credit until the next cycle.
4. Confirm approval: Assessors issue confirmation receipts or mail approval notices. Keep a copy for your records.
5. Check tax bills: Verify the credit on your annual bill (mailed by March 1, due October 15). Look for a line item labeled “Homestead Credit” or “State Credit.” If missing, contact the assessor immediately.

Maintaining the Credit

• Report changes: Notify the assessor within 30 days if you move, rent the property, or transfer ownership. Failure to report changes can lead to repayment of credits plus penalties.
• Annual review: While the credit renews automatically, counties may conduct audits. Keep documentation confirming residency and ownership.
• Mortgage escrow adjustments: Provide your mortgage company with proof of the credit so they adjust escrow collections. Otherwise, you may overpay and wait for an escrow refund.

Additional Relief Under Amendment 79

• Assessment cap: Amendment 79 caps annual increases in assessed value at 5% for homesteads, helping limit tax growth. Keep track of assessment notices and appeal if increases exceed the cap.
• Senior freeze: Homeowners age 65 or disabled may freeze their assessed value, preventing future increases unless improvements are made. Contact the assessor to apply for the freeze; it stacks with the homestead credit.

Strategies to Maximize Savings

• File immediately after closing: New homeowners should register the homestead during the first visit to the assessor’s office when recording the deed.
• Coordinate with property tax appeals: If you appeal your property value and obtain a reduction, the credit still applies, further lowering the bill.
• Check for multiple parcels: If your property spans multiple parcel numbers (e.g., a home plus adjacent lot), ensure the credit is applied to the parcel with the dwelling.
• Review escrow statements: Confirm that your mortgage servicer reflects the $425 credit. If not, provide the tax bill showing the credit and request an adjustment.
• Combine with senior freeze: Eligible seniors should apply for both the credit and the assessed value freeze to maintain predictable taxes.

Example Scenarios

1. New homeowner: After purchasing a home in Pulaski County, Ms. Brown applies for the homestead credit during deed recording. The credit appears on her next tax bill, reducing her school tax by $425 and lowering her monthly escrow by $35.
2. Senior homeowner: Mr. Johnson, age 70, receives the homestead credit and applies for the senior assessed value freeze. His taxes remain stable despite rising property values, giving him budget certainty.
3. Manufactured home owner: The Taylors own a manufactured home on land they lease. After permanently affixing the home and paying real property tax, they qualify for the homestead credit, reducing their annual bill.

Common Mistakes

• Assuming automatic enrollment: Counties do not automatically grant the credit when you buy a home. You must apply.
• Failing to update residency: Moving to a new primary residence without updating the homestead designation can lead to two credits being claimed and penalties.
• Not checking the bill: Errors can occur. Always verify the credit each year and contact the assessor if missing.
• Applying for multiple properties: Attempting to claim the credit on more than one property violates state law and may result in fines.

Frequently Asked Questions

Is there an income limit? No. All homeowners using the property as their principal residence qualify regardless of income.

Can renters claim the credit? No. Only property owners are eligible.

Do I need to reapply each year? No, but report changes in ownership or occupancy promptly.

What if the credit isn’t on my bill? Contact the county assessor to verify your application status. If approved, they can issue a corrected tax bill.

Does the credit apply to special assessments? The credit reduces school district taxes only. Other assessments (e.g., drainage, fire district) remain due.

Additional Resources

• Arkansas DFA Homestead Credit information: https://www.dfa.arkansas.gov/excise-tax/sales-and-use-tax/homestead-tax-credit
• County assessor directory: https://www.arcounties.org/counties/
• Amendment 79 FAQs: https://www.dfa.arkansas.gov/images/uploads/exciseTaxOffice/Amendment79FAQs.pdf
• Arkansas Taxpayer Assistance: https://www.dfa.arkansas.gov/taxpayer-assistance/

By registering promptly and monitoring annual tax statements, Arkansas homeowners can ensure they receive the full $425 credit every year while coordinating with other Amendment 79 protections to keep property taxes manageable.