Arkansas was recently named one of the top states for overall economic outlook for 2025.
The American Legislative Exchange Council (ALEC) ranked Arkansas #10 for economic outlook in its Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index. This index serves as a forecast of all U.S. states’ economic standing based on 15 state policy variables.
“Pro-growth policies make a difference, and Arkansas’ steady rise in national rankings proves it,” said Governor Sanders. “Arkansas is setting the standard through our commonsense, conservative approach – cutting taxes, growing our workforce, and investing in education – creating an economy that is stronger than ever before.”
Under Governor Sanders’ leadership, Arkansas has lowered its state income tax by over 20%, invested in the state’s workforce and energy grid, and seen record job numbers. Arkansas recently ranked #1 in the nation for lowest cost-of-living, #1 for inbound migration, and #1 in the country for economic growth for two consecutive quarters.
Now in its 18th edition, the Rich States, Poor States index is based on factors directly influenced by state legislators and serves as a forecast for economic growth. Each state receives an individual evaluation, assessing key policy areas, to measure their economic trajectories.
“Arkansas’ economy is thriving, and we are building momentum in our state thanks to the leadership of Governor Sanders and the policies enacted by the Arkansas General Assembly,” said Secretary of Commerce Hugh McDonald. “The positive economic outlook for Arkansas tells us what we already know: we are treasuring and promoting our beautiful state as a place people want to live, raise a family and build a business; creating a climate that supports businesses and has reasonable, common sense regulations; reducing the tax burden that allocates capital to more productive uses to encourage investment; creating jobs; and building a better quality of life for every Arkansan.”
Arkansas has significantly improved its economic outlook rankings in recent years. Since 2019, Arkansas has risen from #23 on the ALEC-Laffer State Economic Competitiveness Index to #10 for 2025. Under Governor Sanders’ administration, Arkansas has gone from #15 to #10.
Arkansas was also ranked #1 in the Estate/Inheritance and Right-to-Work subcategories. Arkansas was #2 in the Property Tax Burden subcategory, #3 in the Recently Legislated Tax Changes and Average Workers’ Compensation Costs subcategories, #7 in the Debt Service as a Share of Tax Revenue subcategory, and #8 in the Top Marginal Corporate Income Tax Rate subcategory.
The variables used in the ALEC-Laffer State Economic Competitiveness Index include Top Marginal Personal Income Tax Rate, Top Marginal Corporate Income Tax Rate, Personal Income Tax Progressivity, Property Tax Burden, Sales Tax Burden, Estate/Inheritance Tax, Recently Legislated Tax Changes, Debt Service as a Share of Tax Revenue, Public Employees Per 10,000 of Population, State Tort System Costs, State Minimum Wage, Average Workers’ Compensation Costs, Right-to-Work Status, and Number of Tax Expenditure Limits.