Arizona has a state income tax, and it applies to most residents and workers

Arizona charges a state income tax on wages, self-employment income, interest, dividends, and other earnings. The tax rate varies depending on your income level — Arizona uses a progressive tax system with multiple brackets. If you work in Arizona or live there, you will owe state income tax unless you fall into a narrow category of people exempt by law.

The state also taxes business income, capital gains, and retirement distributions in most cases. Arizona does not have a local income tax on top of the state rate, so your state tax bill comes only from the state, not from your city or county.

Key Takeaways

  • Arizona's state income tax rate ranges from 2.55% to 4.5% depending on your income bracket, with rates adjusted annually.
  • You owe Arizona income tax if you are a resident for the full tax year, or if you worked in Arizona even if you lived elsewhere.
  • Certain types of income — including some retirement distributions and military pay — may be partially or fully exempt from Arizona tax.
  • Arizona does not tax Social Security benefits, which is a significant difference from federal tax treatment.

Arizona's income tax brackets and rates

Arizona's income tax brackets change each year because they are adjusted for inflation. For the 2024 tax year, the state has five tax brackets ranging from 2.55% on the lowest income to 4.5% on the highest. The exact income thresholds that trigger each bracket shift annually, so the amount of income taxed at each rate is different from year to year.

You can find the current year's brackets on the Arizona Department of Revenue website. The brackets apply differently to single filers, married couples filing jointly, and heads of household. Because the rates and thresholds change, it is important to check the current year's numbers rather than relying on a figure from a previous year.

Who has to pay Arizona income tax

You owe Arizona state income tax if you are a resident for the entire tax year. Arizona considers you a resident if you lived in the state for more than 183 days during the year, or if you maintained a permanent home there and spent any part of the year in Arizona. Once you are a resident, you owe tax on all your income, regardless of where you earned it.

If you worked in Arizona but lived in another state, you still owe Arizona tax on the income you earned there — even if you were not a resident. You would file both an Arizona return and a return in your home state, though you may receive a credit to avoid double taxation. Non-residents who earned income only outside Arizona do not owe Arizona tax.

Income that Arizona does not tax

Arizona does not tax Social Security benefits, which is one of the largest exemptions. This applies to all Social Security income, whether you are retired, disabled, or receiving survivor benefits. Many states tax Social Security; Arizona does not.

Military pay received by active-duty service members is exempt from Arizona tax. Certain pension income may also be exempt or partially exempt depending on the source and your age. Some retirement distributions from may have access to plans receive preferential treatment, though the rules are complex and depend on when the distribution was made and what type of account it came from. The Arizona Department of Revenue publishes a guide to retirement income exemptions if you receive pension or retirement distributions.

How to file Arizona state income tax

You file Arizona income tax using Form 140 (for residents) or Form 140-NR (for non-residents). The form asks for your income from all sources, deductions, and credits. You can file by mail, electronically through the Arizona Department of Revenue website, or through a tax software provider that supports Arizona returns.

The federal tax deadline — usually April 15 — is also the deadline for Arizona state tax. If you file for a federal extension, you automatically receive an extension for Arizona as well. You can request an extension through the Arizona Department of Revenue if you need more time.

Tax credits and deductions available in Arizona

Arizona offers several state tax credits that reduce the amount of tax you owe. These include credits for dependent children, education expenses, property taxes, and charitable donations. Some credits are refundable, meaning you receive money back if the credit exceeds your tax bill; others only reduce what you owe.

You can take the standard deduction (which varies by filing status and changes annually) or itemize deductions if your itemized deductions exceed the standard amount. Arizona generally follows federal rules for what counts as a deductible expense, though some state-specific deductions exist. The Arizona Department of Revenue website lists current deductions and credits for the tax year you are filing.

What happens if you do not pay Arizona income tax

If you owe Arizona income tax and do not pay, the state can assess penalties and interest on the unpaid amount. The penalty for late payment is typically 5% of the unpaid tax per month, up to a maximum. Interest accrues daily on the unpaid balance at a rate set by the state each quarter.

The Arizona Department of Revenue can place a lien on your property, garnish your wages, or intercept tax refunds to collect unpaid state income tax. If you cannot pay in full, you can contact the department to set up a payment plan. The sooner you contact them, the more options you may have to resolve the debt.

Frequently Asked Questions

Do I have to file an Arizona return if I only lived there part of the year?

If you were a resident for more than 183 days, you file as a resident and owe tax on all income. If you were there fewer than 183 days but earned income in Arizona, you file as a non-resident on Form 140-NR and owe tax only on Arizona-source income. If you earned no income in Arizona and were there fewer than 183 days, you do not file an Arizona return.

Does Arizona tax retirement account withdrawals?

It depends on the type of account and when the withdrawal was made. Traditional IRA and 401(k) withdrawals are generally taxable. However, certain pension income and some distributions from may have access to retirement plans may be exempt or partially exempt. Military retirement pay is exempt. Check with the Arizona Department of Revenue or a tax professional about your specific situation.

Can I claim the same deductions on my Arizona return that I claim on my federal return?

Arizona generally follows federal rules, so most deductions you claim federally can also be claimed on your Arizona return. However, some deductions differ between state and federal tax, and Arizona has some state-specific deductions. Review the Arizona Department of Revenue instructions for your filing status to confirm which deductions apply.

What if I moved out of Arizona during the year?

You file as a resident for the part of the year you lived in Arizona and as a non-resident for the part you lived elsewhere. You report all income earned while a resident, and only Arizona-source income earned while a non-resident. The Arizona Department of Revenue Form 140 instructions explain how to calculate your tax for a partial-year resident.