An Arkansas real estate agent tells her client that the property tax on a $400,000 home will be calculated by multiplying the full $400,000 market value by the local millage rate. A competing agent tells the same client that Arkansas first converts market value to an assessed value before applying the millage rate, resulting in a much lower tax base. The client asks which agent is correct and what the assessed value would be. Which of the following responses is accurate?

Correct Answer

B) The second agent is correct; Arkansas assesses at 20% of market value, so the assessed value is $80,000.

The second agent is correct. Arkansas law (Ark. Code Ann. § 26-26-101 et seq.) uniformly requires that real property be assessed at 20% of its true market value statewide. For a $400,000 home: $400,000 × 20% = $80,000 assessed value. The local millage rate is then applied to the $80,000 assessed value, not the full $400,000 market value. This is a statewide statutory requirement, not a matter of county discretion.