AR HB1409

Extends Arkansas state income tax exemption for military service pay to foreign service officers and specialists employed by the U.S. Department of State to encourage them to choose or retain Arkansas as their state of residency and retirement location.

Amends Arkansas Code § 26-51-306 to include "foreign service personnel" in the income tax exemption for service pay or allowances, effective for tax years beginning January 1, 2014 and later.

Defines "foreign service personnel" as persons employed by the U.S. Department of State as a foreign service officer or specialist who reside outside Arkansas more than 180 days in the calendar year.

Exemption applies only to service pay and allowances from foreign service employment; income derived from other sources remains subject to state income tax.

Effective for tax years beginning on and after January 1, 2017.