Budget & Tax

Arkansas surges ahead of Oklahoma in tax competition

June 22, 2026

Ray Carter

For years, Texas has been viewed as Oklahoma’s chief regional competitor. Texas has no personal income tax, has had one of the nation’s strongest economies, and has enjoyed significant population growth.

But now Arkansas is hot on Oklahoma’s heels, offering lower taxes while attracting strong levels of domestic migration.

Andrew Wilford, director of state policy for the National Taxpayers Union Foundation, recently noted that Arkansas has aggressively cut its income tax in recent years.

“After a special fiscal session called by Governor Sarah Huckabee Sanders, Arkansas recently became the fifth state this year to cut its income tax, dropping the top rate from 3.9% to 3.7%,” Wilford wrote. “In doing so, Arkansas joined state legislatures in Georgia, South Carolina, Utah, and West Virginia in passing new income tax cuts this year, all of which are effective January 1, 2026.”

Oklahoma’s current personal income-tax rate is 4.5 percent, meaning residents of Oklahoma may pay nearly 22 percent more in state income tax than their counterparts in Arkansas.

Since COVID, Oklahoma has experienced strong growth in domestic migration that has pumped substantial new revenue into the state economy, generally outpacing Arkansas.

But Arkansas is now attracting a larger share of higher-income individuals than Oklahoma, according to recent reports.

A report from the National Taxpayers Union Foundation, “Migration in Minutes,” showed that Oklahoma ranked 20th-best based on the number of individuals moving to the state who had incomes of $200,000 or more. The report showed that Oklahoma gained a net 527 residents in 2022 who had incomes above that level.

However, Arkansas ranked 17th best with 1,167 net new residents with higher incomes moving to the state that year, more than twice the number moving to Oklahoma.

The two states are closely matched when comparing total domestic migration, although Oklahoma maintains a lead in several categories. However, Arkansas could overtake Oklahoma in the near future, if it has not already, based on the most recent trend.

From 2013 to 2022, Oklahoma experienced greater net domestic migration than all but 14 states, as far more people moved into Oklahoma than moved out. During that decade, Oklahoma gained a net 66,534 residents from domestic migration, the National Taxpayers Union Foundation report found, despite experiencing a significant oil bust that hammered the Oklahoma economy from 2015 to 2018.

Arkansas ranked 19th, attracting a net 56,304 new residents from 2013 to 2022.

Oklahoma ranked 10th best, with someone moving here every 41 minutes and 45 seconds in 2022, while Arkansas ranked closely behind at 12th, attracting a new resident every 46 minutes and 53 seconds in 2022.

The National Taxpayers Union Foundation report found that Oklahoma ranked 12th best nationally when it came to attracting migration from individuals age 35 and younger, while Arkansas was close behind, ranking 13th.

The National Taxpayers Union Foundation estimated that Oklahoma’s state-and-local tax revenue will increase by nearly $47.6 million in 2026 as a result of the domestic migration that occurred in 2022. But Arkansas fared even better, boosting state-and-local tax revenue by $73.5 million.

Arkansas has also gained more than $162.7 million in new revenue thanks to net-positive domestic migration from 2013 to 2022, while Oklahoma gained $34.5 million thanks to a net increase in domestic migration over that decade. Oklahoma’s performance was harmed by the loss of population and associated revenue from roughly 2016 to 2018 during the oil bust, even though the state’s strong domestic migration since that time has offset some of those losses.

The latest edition of the “Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index” report, released by the American Legislative Exchange Council Center for State Fiscal Reform, has also found that Oklahoma has experienced strong growth in domestic migration since 2020.

That report shows Oklahoma experienced net outmigration of 17,832 combined from 2016 to 2018 as a result of the oil bust. That was followed by a meager net increase of 4,926 in 2019.

But in the five-year period from 2020 to 2024, the report shows that Oklahoma experienced a collective net increase in population from domestic migration totaling 121,489.

In contrast, Arkansas had modest net growth in domestic migration all but one year from 2015 to 2020, with between 943 and 4,170 net new residents arriving each year, according to the report.

However, since COVID, Arkansas’ domestic migration has exploded, ranging between 13,919 and 18,583 net new residents each year from 2021 to 2024.

From 2020 to 2024, Arkansas gained a net 69,069 residents from domestic migration compared to the 121,489 in Oklahoma. But Arkansas attracted a larger net number of new residents from other states in 2024 than did Oklahoma, marking the first time that has happened since COVID.

Despite Arkansas’ current advantage on the personal income-tax rate, Wilford noted Oklahoma has already taken steps that could once again put the state ahead of Arkansas.

Unlike Arkansas, the personal income tax in Oklahoma is scheduled to gradually phase out, with future cuts mandated whenever state revenue collections increase by a certain amount. Over time, that process is expected to lead to the gradual-but-complete repeal of Oklahoma’s state income tax.

Arkansas legislators have not enacted a similar plan in their state law.

“Even though Arkansas has cut its income tax four times in the past four years, the plan to get to zero is almost as important as getting there,” Wilford wrote. “Taxpayers may find it hard to conceptualize how much they will save from a 0.1% or 0.2% income tax cut, but they can see exactly the difference that zero income tax would make every April. Making clear to taxpayers that the state has been set on a responsible path to accomplish that goal makes a difference.”