Bank Gap by State

The Bank Gap in Arkansas

Arkansas combines a low cost of living with a moderate top tax rate, so the Bank Gap here is mostly about the size of the account, not the tax treatment.

Big-bank average0.38%

Best available4.40%

$1,005/yrlost on a $25k balance · 4.02 pp spread

Last reviewed August 7, 2026 · SwitchWize Research Desk

Best savings APY

4.40%

high-yield

National average

0.38%

big-bank avg

APY gap

4.02 pp

spread

AR tax on interest

4.40%

top marginal rate

Before AR tax

$1,005/yr

on a $25,000 balance

After AR 4.4% tax

$961/yr

recoverable by switching

On a $25,000 balance, the gap is about $1,005 a year before tax. After Arkansas's 4.4% top income-tax rate on the additional interest, you keep about $961. Because Treasury interest is exempt from Arkansas income tax, routing that cash through a state-tax-exempt Treasury vehicle can recover most of the difference.

Estimated Bank Gap by balance

Estimated annual Bank Gap by balance at 0.38% current APY versus 4.40% better-fit APY, before and after AR state income tax
Balance	Current earnings	Better-fit earnings	Estimated Bank Gap	After AR tax
$5,000	$19	$220	$201	$192
$10,000	$38	$440	$402	$384
$25,000	$95	$1,100	$1,005	$961
$50,000	$190	$2,200	$2,010	$1,922
$100,000	$380	$4,400	$4,020	$3,843

Estimates over 12 months at 0.38% current APY and 4.40% better-fit APY. The "After AR tax" column applies AR's 4.4% top income-tax rate to the additional interest; federal tax applies on top and is not shown. Example only — your result depends on your balance, rates, and time horizon.

Why Arkansas changes the math

Arkansas taxes savings interest at a top graduated rate of 4.4%. Treasury interest is generally exempt from state tax, giving higher-income Arkansas savers a modest after-tax edge from T-Bills, though the gap between that and a top HYSA rate is usually small at this tax rate.

One of the lowest costs of living in the country means a typical emergency fund is a smaller dollar figure here than almost anywhere else, but leaving even a modest balance at the national-average rate still gives up the full Bank Gap.

Cost of living in Arkansas is among the lowest in the country, which shapes how large an emergency fund needs to be and therefore how many dollars the Bank Gap quietly costs on idle cash.

After-tax tip

Because Arkansas taxes savings interest but not Treasury interest, the highest after-tax yield is not always the highest headline APY. Run your tax profile through the short-term savings tool to see whether a Treasury bill or government money market fund beats a taxable account for you.

Open the short-term savings tool

Frequently asked questions

Does Arkansas tax high-yield savings account interest?

Yes. Arkansas treats savings interest as taxable income, with a top rate of 4.4%. Interest from U.S. Treasury bills and the Treasury portion of a government money market fund is generally exempt from Arkansas income tax, which can change the after-tax winner for higher earners.

Is a high-yield savings account worth it in Arkansas?

Yes. Even after Arkansas state tax, moving cash from a national-average account to a top high-yield savings account still leaves you with substantially more interest. The Bank Gap is far larger than the state-tax drag on the additional interest.

Are T-Bills better than a HYSA for Arkansas savers?

They can be for higher earners. Because Treasury interest is exempt from Arkansas income tax, a T-Bill or government money market fund can deliver a higher after-tax yield than a fully taxable savings account at a similar headline rate. The short-term savings calculator computes the breakeven for your exact tax situation.

Your personal Bank Gap

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Educational information, not tax or financial advice. State tax rules are summarized at a high level and depend on your full situation. Rates are illustrative of current market conditions and should be confirmed with the provider. Confirm tax treatment with a qualified professional.