The first $9,000 of military pay of enlisted personnel is exempt from Arkansas tax; officers do not have to pay state income tax on the first $6,000 of their military pay. Retirees pay no tax on Social Security, or on the first $6,000 in gain on their pensions along with recovery of cost basis. Residents of Texarkana, Arkansas are exempt from Arkansas income tax; wages and business income earned there by residents of Texarkana, Texas are also exempt.