2025 Arkansas Tax Benefits for Immigrants: EITC, Child Credit, and More

Key Takeaways

• Arkansas introduces Child, Earned Income, and Caregiver Tax Credits effective from January 1, 2025.
• Only immigrants with valid Social Security numbers are eligible; ITIN holders remain excluded.
• Caregiver Tax Credit capped at $1.5 million yearly, awarded first-come, first-served basis.

As of July 10, 2025, Arkansas has introduced several important changes to its state tax benefits and credits, directly affecting immigrants who live and work in the state. These changes include the launch of the Arkansas Child Tax Credit, updates to the state Earned Income Tax Credit (EITC), and the introduction of a new Caregiver Tax Credit. This update explains what has changed, who is affected, when the changes take effect, what actions are required, and what these changes mean for immigrants, especially those with pending or future tax filings.

Summary of What Changed

Starting with the 2025 tax year, Arkansas has expanded its tax support for families and caregivers. The most notable updates include:

• The introduction of the Arkansas Child Tax Credit, providing a refundable credit of $300 per qualifying child.
• The continuation of the state Earned Income Tax Credit (EITC), which supplements the federal EITC for low- and moderate-income workers.
• The launch of the Caregiver Tax Credit, offering up to $2,000 or $3,000 for eligible caregiving expenses.
• Adjustments to these credits for inflation and increased oversight to prevent fraud.

These changes are designed to help working families, including immigrants who meet the eligibility requirements. However, certain groups, such as undocumented immigrants and those who file taxes using an Individual Taxpayer Identification Number (ITIN), remain ineligible for these credits under current law.

Who Is Affected

The new and updated tax credits affect a wide range of Arkansas residents, but eligibility depends on several factors:

• Immigrants with valid Social Security numbers (SSNs) who are lawful residents or U.S. citizens and meet income and family requirements can claim these credits.
• Undocumented immigrants and ITIN holders are not eligible for the Arkansas Child Tax Credit, state EITC, or Caregiver Tax Credit.
• Families with qualifying dependents and those who provide care for family members may benefit from the new credits.
• Low- and moderate-income workers are the primary target for the EITC and Child Tax Credit.

Effective Dates

• Arkansas Child Tax Credit: Effective for tax years beginning January 1, 2025.
• Caregiver Tax Credit: Also effective for tax years beginning January 1, 2025.
• State Earned Income Tax Credit: Ongoing, with no major changes in 2025.
• Historic Rehabilitation Tax Credit: Extended through 2030, with some changes in 2023.

Required Actions for Immigrants and Taxpayers

To benefit from these credits, eligible immigrants and other taxpayers must take specific steps:

1. File both federal and Arkansas state income tax returns for the 2025 tax year, even if your income is below the usual filing threshold. Filing is necessary to claim refundable credits.
2. Ensure you, your spouse (if filing jointly), and your dependents have valid SSNs. Credits like the Arkansas Child Tax Credit and EITC require valid SSNs for all listed individuals.
3. Keep records of caregiving expenses if you plan to claim the Caregiver Tax Credit. Documentation will be needed for verification.
4. Apply early for the Caregiver Tax Credit, as the total credits are capped at $1.5 million per year and are awarded on a first-come, first-served basis.
5. Monitor annual adjustments to the Arkansas Child Tax Credit, as the amount may increase each year due to inflation.
6. Be prepared for possible audits or requests for additional information from the Arkansas Department of Finance and Administration (DFA), which is increasing oversight to prevent fraud.

Detailed Overview of Each Credit

Arkansas Child Tax Credit

• Amount: $300 per qualifying child, refundable.
• Income Limits: Up to $100,000 for individual filers, $200,000 for joint filers.
• Eligibility: Must have at least one qualifying dependent and meet income requirements. Both the taxpayer and dependents must have valid SSNs.
• Annual Adjustments: The credit amount will be adjusted each year for inflation.
• How It Works: If the credit is larger than your tax bill, you get the extra money as a refund.
• Who Benefits: In 2022, about 618,000 taxpayers with 793,000 dependents would have qualified. For 2025, about 370,000 taxpayers are expected to see their tax bills go down, and 250,000 will get a refund.
• What’s New: This is a new credit for 2025, created under HB1015.

State Earned Income Tax Credit (EITC)

• Nature: Refundable credit that adds to the federal EITC.
• Calculation: The Arkansas EITC is a set percentage of the federal EITC amount.
• Federal EITC Basics: The federal EITC is for low- and moderate-income workers and families. It reduces the amount of tax owed and may result in a refund.
• Eligibility:
  • Must have earned income (from work or self-employment).
  • Must have a valid SSN for the taxpayer, spouse, and qualifying children.
  • Must be a U.S. citizen or resident alien for the entire tax year.
  • Cannot claim the EITC with an ITIN.
  • Must file a federal tax return, even if not required by income.
• Who Benefits: Immigrants who are resident aliens with valid SSNs and meet income and family requirements can claim both the federal and Arkansas EITC. ITIN holders and undocumented immigrants are not eligible.
• Recent Changes: No major changes in 2025; Arkansas continues to align its EITC with the federal program.

Caregiver Tax Credit (Caring for Caregivers Act)

• Amount: Up to $2,000 or $3,000, depending on the type of care and expenses.
• Eligibility: Taxpayers who spend money caring for certain family members. Must have valid SSNs and meet all filing requirements.
• Annual Cap: Only $1.5 million in credits are available each year, so early application is important.
• How It Works: The credit helps families who care for relatives at home, which is common in many immigrant households.
• Implementation: Starts with the 2025 tax year, under HB1076.
• Administrative Details: The Arkansas Integrated Revenue System (AIRS) will handle applications and audits.

Other State Programs

• Historic Rehabilitation Tax Credit: While not a direct benefit for most individual taxpayers, this program helps property owners and developers who fix up historic buildings. Immigrant entrepreneurs or property owners may benefit if they are involved in such projects. The program was expanded in 2023 and is available through 2030.

Eligibility and Practical Considerations for Immigrants

Social Security Number Requirement

• Key Point: A valid SSN is required for the taxpayer, spouse, and any dependents claimed for the Arkansas Child Tax Credit and EITC. Immigrants who are lawful residents or citizens and have SSNs can claim these credits. Those with only ITINs or who are undocumented cannot claim these benefits.

Resident Alien Status

• EITC Requirement: The IRS requires that you be a U.S. citizen or resident alien for the entire tax year to claim the EITC. Resident aliens are people who have a green card or meet the IRS’s substantial presence test.

Filing Requirement

• Action Needed: You must file both federal and Arkansas state tax returns to claim these credits, even if your income is below the usual filing level. This is especially important for refundable credits, which can result in a refund even if you owe no tax.

Refundability

• Benefit: Both the Arkansas Child Tax Credit and EITC are refundable. This means that if your credit is more than your tax bill, you get the extra money as a refund. This can provide important financial help to low-income families.

Cost-of-Living Adjustments

• Annual Increase: The Arkansas Child Tax Credit will go up each year to keep up with inflation. This helps make sure the credit keeps its value over time.

Caregiver Credit

• Support for Families: The new Caregiver Tax Credit helps families who spend money to care for relatives at home. This is especially helpful for immigrant families who often have several generations living together.

Expert and Stakeholder Perspectives

Arkansas Department of Finance and Administration (DFA)

• The DFA says these credits are important for lowering taxes for working families and helping those with dependents. The DFA manages these credits and checks for fraud or mistakes.

Policy Analysts

• Experts say that refundable credits like the EITC and Child Tax Credit are some of the best ways to fight poverty and help families with children. However, because ITIN holders are not eligible, many undocumented immigrants do not get these benefits, which is a gap in the policy.

Advocacy Groups

• Some groups want Arkansas to allow ITIN holders to claim these credits, as some other states have done. As of 2025, Arkansas has not made this change.

Implications for Pending and Future Applications

If you are an immigrant in Arkansas planning to file taxes for 2025 or later, here’s what you need to know:

• If you have a valid SSN and meet all other requirements, you can claim the Arkansas Child Tax Credit, state EITC, and Caregiver Tax Credit.
• If you only have an ITIN or are undocumented, you cannot claim these credits under current law.
• If you are caring for a family member, keep careful records of your expenses and apply early for the Caregiver Tax Credit, since funds are limited.
• If you have pending tax filings or are unsure about your eligibility, contact the Arkansas DFA or a qualified tax professional for help.

Annual Adjustments and Oversight

• The Arkansas Child Tax Credit will be adjusted each year for inflation, so check the latest amount before filing.
• The DFA is increasing audits and checks to make sure credits are claimed correctly and to prevent fraud.

Official Resources and Where to Get Help

For the most up-to-date and official information about these credits, visit the Arkansas Department of Finance and Administration’s Individual Income Tax page. This site provides forms, instructions, and contact information for questions about the Arkansas Child Tax Credit, state Earned Income Tax Credit, and Caregiver Tax Credit.

For federal EITC details, you can also visit the IRS EITC page.

Key Takeaways and Next Steps

• Check your eligibility: Make sure you, your spouse, and your dependents have valid SSNs.
• File your taxes: Even if your income is low, file both federal and state returns to claim refundable credits.
• Keep records: If you plan to claim the Caregiver Tax Credit, save receipts and other proof of caregiving expenses.
• Apply early: For the Caregiver Tax Credit, apply as soon as possible since the total amount available is limited each year.
• Stay informed: Watch for annual updates to the Arkansas Child Tax Credit amount and any changes in eligibility rules.
• Get help if needed: If you have questions, contact the Arkansas DFA or a trusted tax professional.

As reported by VisaVerge.com, these changes reflect Arkansas’s ongoing efforts to support working families, including immigrants who meet the legal requirements. While the Arkansas Child Tax Credit, state Earned Income Tax Credit, and Caregiver Tax Credit provide important help, the exclusion of ITIN holders means some immigrant families will not benefit under current rules. Policy discussions continue, and future changes are possible, so staying informed is important.

By understanding these updates and taking the right steps, eligible immigrants in Arkansas can make the most of the new and existing tax credits in 2025 and beyond.

Learn Today

Arkansas Child Tax Credit → A refundable state tax credit of $300 per qualifying child starting tax year 2025, adjusted annually for inflation.
Earned Income Tax Credit (EITC) → A refundable credit supplementing federal EITC for low- to moderate-income workers meeting eligibility requirements.
Caregiver Tax Credit → A state credit up to $3,000 reimbursing eligible caregiving expenses, capped at $1.5 million annually.
Social Security Number (SSN) → A unique nine-digit number required for filing and claiming most Arkansas tax credits legally.
Individual Taxpayer Identification Number (ITIN) → An IRS number for tax purposes only, making holders ineligible for Arkansas refundable tax credits.

This Article in a Nutshell

Arkansas’s 2025 tax updates provide vital credits: Child Tax Credit, Earned Income Tax Credit, and a new Caregiver Tax Credit, aimed at supporting working families including eligible immigrants with valid SSNs. Early filing and documentation are required to claim these refundable credits under tight state oversight.
— By VisaVerge.com