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

Arizona has a state income tax. If you live in Arizona or earn income there, you will owe state income tax on most types of earnings. The tax rate varies depending on your income level — Arizona uses a progressive tax system with multiple brackets, meaning higher earners pay a higher percentage. The state taxes wages, self-employment income, interest, dividends, and retirement distributions.

You file Arizona state taxes separately from federal taxes, using Form 140 (the Arizona Individual Income Tax Return) or a related form depending on your situation. The deadline is typically April 15, the same day federal taxes are due. If you owe money, you pay the state directly. If you overpaid through withholding, you receive a refund from Arizona.

Key Takeaways

  • Arizona residents and anyone earning income in Arizona must file state income tax returns, with rates ranging across multiple tax brackets based on income level.
  • You file Arizona taxes on Form 140 by April 15 each year, separate from your federal return.
  • Arizona taxes wages, self-employment income, retirement account withdrawals, interest, and dividends, but excludes certain types of income like Social Security benefits in some cases.
  • If you move to Arizona from another state, you may owe taxes on income earned before you arrived, depending on when you established residency.

Arizona tax brackets and rates for the current year

Arizona's income tax brackets change each year based on inflation adjustments. The state currently has five tax brackets ranging from roughly 2.5% at the lowest income level to around 4.5% at the highest, though the exact percentages and income thresholds shift annually. You can find the current year's brackets on the Arizona Department of Revenue website, which publishes them before the tax year begins.

Your filing status — single, married filing jointly, married filing separately, or head of household — determines which bracket applies to your income. A married couple filing jointly will have higher income thresholds before moving into the next bracket compared to a single filer with the same total income. The state also offers a standard deduction that reduces your taxable income before the brackets apply.

What income Arizona taxes and what it does not

Arizona taxes most forms of income: W-2 wages from an employer, self-employment income, rental income, capital gains, interest, and dividends. If you receive a distribution from a traditional IRA, 401(k), or similar retirement account, that distribution is taxable in Arizona. Pension income is also taxable, though Arizona offers a pension exclusion for certain types of retirement income — the rules depend on your age and the source of the pension.

Social Security benefits are generally not taxed by Arizona, even though they may be taxed at the federal level. Certain types of income are also excluded: gifts, inheritances, life insurance proceeds, and workers' compensation. If you have questions about whether a specific type of income you received is taxable in Arizona, the Department of Revenue publishes guidance on their website, or you can contact them directly.

Who must file an Arizona tax return

You must file an Arizona return if you are a resident with income above the filing threshold for your filing status, or if you are a nonresident who earned income in Arizona. Residency is determined by where you lived for more than half the year, or where you maintained a permanent home. If you moved to Arizona partway through the year, you may owe Arizona tax only on income earned after you arrived, depending on the exact dates.

Even if your income is below the filing threshold, you may want to file if you had taxes withheld from your paychecks — filing allows you to claim a refund of the overpayment. If you are self-employed, you must file if your net self-employment income is $400 or more, which is a federal rule, but Arizona also requires a return if you meet the state's income thresholds.

How to file your Arizona state tax return

You can file your Arizona return by mail, online through the Arizona Department of Revenue's website, or through a tax preparation service. If you file online, you will need to create an account on the department's portal. You will need your Social Security number, information about your income (W-2s, 1099s, or records of self-employment income), and documentation of any deductions or credits you are claiming.

The state offers free tax preparation through the Volunteer Income Tax Assistance (VITA) program if your income is below a certain threshold — check the Arizona Department of Revenue website for locations and income limits. If you use a tax professional, they can file your Arizona return at the same time as your federal return. The filing deadline is April 15 unless you request an extension, which moves the deadline to October 15.

Nonresidents and part-year residents

If you worked in Arizona but lived in another state, you owe Arizona tax on the income you earned in the state. You file Form 140-NR (Nonresident Income Tax Return) instead of the standard Form 140. The income you earned outside Arizona is not subject to Arizona tax, but you must report all income on the return and then subtract the out-of-state portion.

If you moved to Arizona during the year, you are considered a part-year resident. You report income earned before you moved as nonresident income and income earned after you moved as resident income. The tax brackets and deductions may differ between the two periods, so the calculation can be complex. The Arizona Department of Revenue provides a worksheet to help part-year residents calculate their tax correctly.

Tax withholding and estimated payments

If you receive a W-2 paycheck, your employer withholds Arizona state tax based on the information you provide on Form A-4 (Arizona Employee's Withholding Certificate). You can adjust your withholding by submitting a new Form A-4 to your employer if you expect to owe more or less tax than usual. If you are self-employed or have income that is not subject to withholding, you may need to make quarterly estimated tax payments to Arizona.

Estimated payments are due on April 15, June 15, September 15, and January 15 of the following year. You calculate the amount based on your expected annual income and tax liability. If you underpay, you may owe a penalty when you file your return, though the state offers a safe harbor if you pay at least 90% of your current year tax or 100% of your prior year tax through withholding and estimated payments.

Frequently Asked Questions

Do I have to pay Arizona income tax if I just moved here?

You owe Arizona tax on income earned after you establish residency in the state. If you moved partway through the year, you file as a part-year resident and report only the income earned after your move date as Arizona-taxable income. You will need to document when you moved — typically the date you obtained housing or registered to vote in Arizona.

Is Social Security taxed in Arizona?

No. Arizona does not tax Social Security benefits. Even if your federal return includes Social Security income, you do not report it on your Arizona return. Other retirement income, such as pensions and IRA distributions, is taxable in Arizona unless it qualifies for a specific exclusion.

What happens if I do not file an Arizona tax return?

The Arizona Department of Revenue can assess penalties and interest on unpaid taxes. If you owe money, the state can place a lien on your property or garnish your wages. If you are owed a refund but do not file, you lose the refund after a certain period. Filing, even if you owe, is better than not filing.

Can I deduct federal income tax on my Arizona return?

No. Arizona does not allow a deduction for federal income tax paid. You can deduct state and local taxes (SALT) on your federal return up to $10,000, but that is a federal rule, not an Arizona rule. Arizona's standard deduction is separate and does not include a federal tax deduction.

Where do I send my Arizona tax payment?

If you file online through the Arizona Department of Revenue portal, you can pay electronically by bank transfer or credit card. If you file by mail, include a check with your return. The mailing address is on the Form 140 instructions. Electronic payment is faster and reduces the risk of your payment being lost in the mail.