AR SB163

Increases the state income tax exemption for retirement and disability benefits from $6,000 to $10,000 for both individual retirement accounts and public or private employment-related retirement systems, plans, or programs.

Establishes an annual cost-of-living adjustment to the exemption amount beginning in tax year 2013, rounded to the nearest $100, based on the Consumer Price Index for All Urban Consumers.

Specifies that only individual retirement account benefits received after age 59½ qualify for the exemption, with exceptions for distributions due to death or disability before that age.

Limits cost-of-living adjustments to increases only; if the adjustment calculation would decrease the exemption amount, it remains at the prior year's level.

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