AR SB224

Amends Arkansas Code § 26-51-307 to create a phased income tax exemption for retirement benefits from armed forces service, starting in tax year 2015 and reaching full exemption by 2018.

Tax year 2015: first $12,000 of armed forces retirement benefits exempt; tax year 2016: first $20,000 exempt; tax year 2017: first $28,000 exempt; tax years 2018 and after: entire amount of armed forces retirement benefits exempt.

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.

Maintains existing $6,000 exemption for retirement benefits from public or private employment-related retirement systems and individual retirement accounts.

Makes clarifying changes to existing law regarding cost basis recovery and restrictions on premature distributions from individual retirement accounts.