AR HB1023

Exempts retirement benefits received from armed forces service from Arkansas state income tax, with amounts increasing annually from $9,000 in 2011 to $35,000 for tax years beginning January 1, 2016 and thereafter.

Defines "armed forces" to include the U.S. Air Force, Army, Coast Guard, Marine Corps, Navy, National Guard of any state, reserve components, and other military and naval forces or auxiliaries of any state or the United States.

Prohibits taxpayers claiming the armed forces exemption from also claiming the existing $6,000 exemption for retirement benefits under subsection (a).

Maintains existing exemptions for individual retirement accounts and employment-related retirement systems limited to $6,000 per year, with special rules for early withdrawals and age requirements.

Effective for tax years beginning on or after January 1, 2011.