Arizona State Tax ― Personal Income Tax
The Arizona Department of Revenue imposes a personal income tax on individuals (residents and nonresidents) who earn income in Arizona. There are five income tax brackets, ranging from 2.59% to 4.54%.
The Arizona personal income tax return provides 4 different filing status options: single, married filing joint return, married filing separate return, and head of household. In most cases, you must use the same filing status on your state tax return that was used on your federal tax return.
Arizona state tax rates for “Single” and “Married Filing Separate Returns” Filers:
- 2.59% on the first $10,000 of Arizona taxable income
- 2.88% on Arizona taxable income between $10,001 and $25,000
- 3.36% on Arizona taxable income between $25,001 and $50,000
- 4.24% on Arizona taxable income between $50,001 and $150,000
- 4.54% on Arizona taxable income of $150,001 or more
Arizona state tax rates for “Married Filing Joint Return” and “Head of Household” Filers:
- 2.59% on the first $20,000 of Arizona taxable income
- 2.88% on Arizona taxable income between $20,001 and $50,000
- 3.36% on Arizona taxable income between $50,001 and $100,000
- 4.24% on Arizona taxable income between $100,001 and $300,000
- 4.54% on Arizona taxable income of $300,001 or more
To compute the amount of Arizona personal income tax that is due, an individual must begin with his/her federal adjusted gross income (AGI). The federal AGI (equivalent to “Arizona gross income”) is subject to certain additions and subtractions to arrive at “Arizona adjusted gross income.” At that point, any applicable deductions or personal exemptions are claimed and subtracted to arrive at “Arizona taxable income.” The individual is then taxed by the rate that corresponds with his/her “Arizona taxable income” level.
Income subject to Arizona state tax includes the following:
- Salaries, wages, and other compensation
- Retirement income
- Unemployment compensation (to the extent it is taxable for federal purposes)
- Income earned in other states or countries by Arizona residents
- Pensions (to the extent they are taxable for federal purposes)
- Capital gains (included in federal adjusted gross income)
- Government bonds
Arizona’s personal income tax returns are due by April 15th following the close of the taxable year for calendar year filers (or the 15th day of the fourth month for fiscal year filers).
Arizona State Tax ― Corporate Income Tax
Arizona’s corporate income tax applies to incorporated businesses and other entities operating in the state. The corporate income tax rate is 6.968% of Arizona taxable income, with a minimum tax of $50.
Arizona State Tax ― Transaction Privilege Tax
Arizona has no sales tax, but it does have a gross receipts tax (GRT) called the Transaction Privilege Tax (TPT). The TPT is often referred to as a sales tax even though its structure is a little different. The TPT is a tax on vendors for the privilege of transacting business in Arizona ― it is not a liability of the consumer, and therefore it is not a “true” sales tax. And although the tax amount may be passed on to the consumer (as it typically is), the TPT is actually a tax on the seller.
The Use Tax is a component of the TPT. While the TPT is imposed on the income/proceeds from engaging in taxable business in Arizona, the use tax applies to the purchaser of tangible personal property that is used, stored, or consumed in Arizona.
Arizona State Tax ― Property Tax
Property tax is an “ad valorem” tax ― the term “ad valorem” means “according to value.” It is administered at the state and local levels, by the Arizona Department of Revenue and local County Assessor offices.
Both real property and personal property are subject to tax in Arizona, although most private household items are exempt. Property taxes are based on two main factors: property valuation (set by the county assessor) and tax rates (set by the municipalities and school districts) which vary depending on location. While most properties are actually assessed and taxed at the local level, the Arizona Department of Revenue has a Property Tax Division, which oversees county assessors and the general administration of property tax laws.
Rates are set by each taxing jurisdiction, based on budget needs and the total assessed valuation within the jurisdiction. The tax rate that applies to a single property is a sum of the state, county, municipal (city/town), school district, and special district rates. However, the Arizona Constitution limits the total amount of primary property taxes that can be levied.
Tax bills arrive approximately 19 months after valuations, giving owners the chance to appeal their property’s valuation. Owners who disagree with their property’s assessment or classification may file a petition with the county assessor.
Arizona State Tax Forms
Form 140 (Resident Personal Income Tax Return)
Form 140A (Resident Personal Income Tax Return – Short Form) can only be used by full-year residents with Arizona taxable income less than $50,000, regardless of filing status.
Form 140EZ (Resident Personal Income Tax Return – EZ Form) is the simplest form for full-year Arizona residents with income less than $50,000.
Form 140PY (Part-Year Resident Personal Income Tax Return) must be filed by part-year residents, and can also be used by residents filing jointly with their part-year resident spouses.
Form 140NR (Nonresident Personal Income Tax Return) must be filed by nonresidents, and can also be used by residents filing jointly with their nonresident spouses.
Form 140ES (Individual Estimated Tax Payment)
Form 204 (Application for Filing Extension) must be received by the original due date of the return (April 15th). The Department will grant (no more than) a six-month extension.
Form 140X (Individual Amended Income Tax Return) may be used to make a change/correction to an individual income tax return (Form 140, 140A, 140EZ, 140PY or 140NR) within 4 years of the original return’s due date.
Arizona State Tax Resources
Arizona Department of Revenue: www.azdor.gov
Arizona state tax forms can be found at the Department of Revenue website, at the following link: www.azdor.gov/Forms
Arizona Online Tax Services: www.aztaxes.gov
Arizona Free File Alliance: www.azdor.gov/EServices/Individuals
Information about Arizona state tax credits (including applications and eligibility requirements): www.azdor.gov/TaxCredits
Arizona TPT Tax Rate Tables: www.azdor.gov/Business/TransactionPrivilegeTax/TPTRates
Arizona Department of Economic Security: www.azdes.gov/aspnew/default
The Arizona Department of Commerce offers “Small Business Services (SBS),” an online resource center for small businesses (includes a guide on how to start, operate, and grow a business in Arizona): www.azcommerce.com/BusAsst/SmallBiz
To inquire about the status of your tax refund, visit the “Check Refund Status” center (you will need to provide your Social Security Number, filing status, zip code, and the tax year): www.aztaxes.gov/default.aspx?target=CheckRefund
To resolve tax problems, visit the Arizona Department of Revenue “Collections and Payment” Center: www.azdor.gov/Collections
Arizona State Board of Equalization: www.sboe.state.az.us
Arizona Tax Court: www.superiorcourt.maricopa.gov/SuperiorCourt/TaxCourt
Arizona’s Tax Freedom Day is April 10th.