State Taxes at a Glance – Arizona
| Type of Tax | 2024 |
|---|
| Individual Rates | 2.50% |
| Corporate / Business Tax Rates | 4.90% |
| Gross Receipts Tax | None |
| Property Taxes | 0.65% as a percentage of primary home |
| Sales Tax | 8.38% (on average) |
| Estate or Inheritance Tax | Yes |
State Income Taxes in Arizona
The state of Arizona does have individual income tax. Starting in 2023, Arizona moved to a flat tax system of 2.50% of individual income tax. It is one of only 10 states that has a flat tax, Arizona being the smallest.
State Business Taxes in Arizona
The state of Arizona has a flat Corporate Tax rate of 4.90%, which is one of only 9 states that has a Corporate Tax Rate under 5%. For other businesses that are flow-thru entities, such as S Corporations, Partnerships, LLCs, etc., they are taxed the individual flat tax rate, 2.50%.
Sales and Property Taxes in Arizona
Sales Tax – like many states, Arizona has multiple tax rates. One at the state level and another at the local level. The state rate is 5.60% the average local rate is 2.78% (total average rate for Arizona Sales Tax is 8.38%).
Property Taxes in Arizona – the average property tax rate for residential property in the state of Arizona is 0.65%, making it a very preferable place to own property. In 2012 Arizona placed a 5% cap on the increase of property value, keeping its property taxes relatively low.
Arizona Qualified Charitable Organizations
In the state of Arizona, you get a tax credit if you donate to either a Qualified Charitable Organization (QCO) or a Qualified Foster Care Charitable Organization (QFCO). That means for every dollar you give a qualified charity, you don’t have to pay tax to the State of Arizona. Your maximum tax credit is $470 if you’re single and $935 if you’re married.
The qualified charitable organizations must qualify per the Arizona Department of Revenue website. Here’s a link.
Please make sure to check with your CPA or tax return preparer to not miss out on this deduction.
Payroll Taxes in Arizona
Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three
- Wage Base – Arizona has a low wage base of $8,000
- UI Rates – range from 0.08% to 20.93%
- Schedules – Arizona has multiple schedules for rates for UI taxes
Arizona Residency
Most states have the 183-day rule to be presumed a resident for tax purposes. But not Arizona. Keep in mind, you are presumed to be a resident if spend more that 9 months in aggregate in Arizona in a taxable year.
Arizona DMV Registration Fees
Arizona DMV fees are based on the value of your vehicle. It currently costs $2.80 to $2.89 per $100 of assessed value based on whether your automobile is new or used. Since your fee is based on the value of your vehicle, it’s deductible. You can log into the Arizona DMV website and get your fees paid.
Social Security in Arizona
Even though Arizona has an income tax, social security benefits are not subject to state tax in Grand Canyon State.
Arizona Business Entities – LLCs
Arizona is one of the cheapest states in the country to set up your LLC. Here are some important facts:
- Arizona does not have an annual LLC fee.
- The year you register your LLC, you pay a one time fee of $50.00
- Secretary of State of Arizona Website – click here