AR SB577

Amends Arkansas Code § 26-51-307 to create a new income tax exemption for retirement benefits received from armed forces service, with amounts increasing annually from $9,000 in 2013 to $40,000 for tax years beginning January 1, 2018 and thereafter.

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

Maintains existing $6,000 annual exemption for retirement benefits from individual retirement accounts and employment-related retirement systems, with armed forces beneficiaries choosing one exemption or the other but not both.

Establishes that individuals age 65 and older who do not claim a retirement benefits exemption are entitled to an additional $20 income tax credit.

Takes effect for tax years beginning January 1, 2013.