Arizona collects state income tax from residents and nonresidents who earn money in the state

Yes, Arizona has a state income tax. The state taxes wages, self-employment income, investment income, and retirement distributions. If you live in Arizona or work there, you will owe state income tax on most types of income. The tax rate depends on your income level and filing status — Arizona uses a progressive tax system with rates that increase as your income rises.

Arizona's Department of Revenue administers the tax. You file your state return separate from your federal return, usually at the same time. The state income tax year runs January 1 through December 31, matching the federal calendar.

Key Takeaways

  • Arizona taxes income at rates ranging from 2.55% to 4.5% depending on your income bracket and filing status.
  • You must file an Arizona return if you lived in the state for any part of the tax year and earned income above the filing threshold.
  • Nonresidents who worked in Arizona during the year owe tax on income earned in the state, even if they lived elsewhere.
  • Arizona allows deductions for federal income tax paid, charitable contributions, and certain retirement account contributions.

Arizona income tax rates and brackets for 2024

Arizona uses five tax brackets. The rate you pay depends on your taxable income and whether you file as single, married filing jointly, married filing separately, or head of household. Rates range from 2.55% on the lowest bracket to 4.5% on the highest.

The brackets adjust each year for inflation. For the 2024 tax year, a single filer with taxable income under $31,000 pays 2.55%. Income between $31,000 and $75,000 is taxed at 3.34%. Income between $75,000 and $115,000 is taxed at 4.17%. Income between $115,000 and $180,000 is taxed at 4.35%. Income over $180,000 is taxed at 4.5%. Married couples filing jointly have higher thresholds at each bracket.

These are state rates only and do not include federal income tax. You will owe both. Some Arizona cities and towns also impose local income taxes on top of state tax — check your city's rules.

Who must file an Arizona state return

You must file if you lived in Arizona for any part of the tax year and your income exceeded the filing threshold. The threshold varies by age and filing status. For 2024, a single person under 65 must file if gross income was $14,600 or more. A married couple filing jointly must file if combined gross income was $29,200 or more. If you are 65 or older, the threshold is higher.

Nonresidents who worked in Arizona during the year must also file, even if they lived in another state. They report only the income earned in Arizona, not income from other states. If you moved to or from Arizona mid-year, you file a part-year resident return.

Even if your income is below the filing threshold, you may want to file anyway if you had taxes withheld from your paychecks — filing allows you to claim a refund of the overpayment.

Deductions and credits available in Arizona

Arizona allows you to deduct federal income tax you paid during the year. This is one of the largest deductions available. You can also deduct charitable contributions to may have access to organizations, though you must itemize rather than take the standard deduction to claim them.

Contributions to traditional IRAs and certain retirement accounts reduce your taxable income. Arizona also offers credits for child and dependent care expenses, education expenses, and property tax paid. Some credits are refundable, meaning you can receive money back even if you owe no tax. Others reduce your tax bill to zero but do not generate a refund.

The Arizona Department of Revenue publishes a full list of deductions and credits each year. Your tax software or preparer can help you identify which ones apply to your situation.

How to file your Arizona state return

You can file online through the Arizona Department of Revenue website, by mail, or through a tax preparer. The state offers free filing software for residents with income below a certain threshold — check the department's website for current income limits.

You will need your federal tax return information, W-2 forms from employers, 1099 forms for self-employment or investment income, and documentation of any deductions or credits you claim. If you are filing as a nonresident, you will also need to report only the income earned in Arizona and provide proof of residency in another state.

The filing deadline is April 15 unless it falls on a weekend or holiday, in which case it moves to the next business day. You can request an extension to October 15, but this extends only the filing deadline — taxes are still due by April 15 or you will owe penalties and interest.

Tax withholding and estimated payments

If you are an employee, your employer withholds Arizona state income tax from your paycheck based on the W-4 form you complete. You can adjust your withholding if too much or too little is being taken out. If you are self-employed or have income not subject to withholding, you may need to make quarterly estimated tax payments to the state.

Estimated payments are due April 15, June 15, September 15, and January 15. If you underpay, you will owe penalties and interest when you file your return. The Arizona Department of Revenue provides a worksheet to calculate how much to pay each quarter.

Frequently Asked Questions

Do I owe Arizona income tax if I moved out of state mid-year?

You owe tax only on income earned while you were an Arizona resident. File a part-year resident return and report only the income from January 1 through your move date. You will not owe tax on income earned after you moved, even if you worked for an Arizona employer remotely.

What if I worked in Arizona but lived in another state?

You owe Arizona tax on the income you earned in the state. File as a nonresident and report only Arizona-source income. You may also owe tax to your home state, but most states allow a credit for taxes paid to other states to avoid double taxation. Check your home state's rules.

Can I deduct federal taxes paid if I take the standard deduction?

No. The federal tax deduction is only available if you itemize deductions. If you take the standard deduction, you cannot claim the federal tax deduction. Compare the two options to see which gives you a larger deduction.

What happens if I file late or underpay?

The Arizona Department of Revenue charges penalties and interest on late payments. Penalties start at 5% of the unpaid tax and increase if you do not pay within a certain time. Interest accrues daily. If you cannot pay by April 15, file your return anyway to reduce penalties — filing late costs less than paying late.

Does Arizona tax retirement income like Social Security or pensions?

Arizona does not tax Social Security benefits. Military pensions and federal pensions receive special treatment — you may exclude a portion depending on your age and when you retired. Private pensions and distributions from IRAs and 401(k)s are taxed as ordinary income. Check the Arizona Department of Revenue website for current exclusion amounts.