Arizona has a state income tax that applies to residents and part-year residents

Yes, Arizona charges state income tax. The state tax rate varies depending on your income level — Arizona uses a progressive tax system with multiple brackets. For the 2024 tax year, rates range from 2.55% on the lowest income bracket to 4.5% on the highest. These rates change year to year, so you need to check the current year's brackets when you file.

Arizona taxes income earned by residents, part-year residents, and nonresidents who earned money within the state. If you lived in Arizona for any part of the tax year, you likely owe Arizona state income tax on your worldwide income. If you moved to Arizona mid-year, you report only the income you earned while living there.

You file Arizona state income tax using Form 140, Form 140-PZ (for part-year residents), or Form 140-NR (for nonresidents). These forms go to the Arizona Department of Revenue, separate from your federal return. The filing important date is the same as federal — April 15 of the following year, unless you get an extension.

Key Takeaways

  • Arizona state income tax rates range from 2.55% to 4.5% depending on your income bracket, and these rates change each year.
  • You owe Arizona state tax if you are a resident, part-year resident, or earned income within the state during the tax year.
  • You file Arizona state tax on a separate form (Form 140, 140-PZ, or 140-NR) with the Arizona Department of Revenue by April 15.
  • Arizona allows you to claim a credit for taxes paid to other states, so you do not pay tax twice on the same income.

How Arizona income tax brackets work

Arizona uses tax brackets, which means different portions of your income are taxed at different rates. You do not pay the top rate on all your income — only on the portion that falls into the highest bracket you reach. For example, if the 2.55% bracket covers income up to $30,000 and the next bracket covers $30,001 to $75,000 at 3.34%, you pay 2.55% on the first $30,000 and 3.34% on income above that.

The brackets change every year because Arizona adjusts them for inflation. You must use the brackets for the tax year you are filing, not the current year. When you file your 2024 return in 2025, you use 2024 brackets. The Arizona Department of Revenue publishes the current brackets on its website each January.

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 reaches higher brackets than a single person with the same total income, so your filing status matters for how much tax you owe.

What income counts toward Arizona state tax

Arizona taxes most types of income the same way the federal government does. This includes wages, salary, self-employment income, interest, dividends, capital gains, rental income, and retirement distributions. If you report it on your federal return, you generally report it on your Arizona return too.

Arizona does exclude certain types of income from state tax. Military retirement pay received by Arizona residents is not taxed. Some pension income may be excluded if you meet age and residency requirements — you must be at least 62 years old and have been an Arizona resident for at least two years. Social Security benefits are not taxed by Arizona. Long-term capital gains may receive preferential treatment depending on the year and your income level.

If you earned income in another state, you may owe tax to both that state and Arizona. Arizona allows you to claim a credit for taxes paid to other states, which reduces your Arizona tax liability. You cannot claim a credit for federal income tax paid.

Who must file an Arizona state return

You must file an Arizona state return if your income exceeds the threshold for your filing status. The threshold amounts change each year with inflation. Generally, if you are required to file a federal return, you are also required to file an Arizona return. Some people below the federal threshold must still file Arizona returns if their Arizona income is high enough.

Part-year residents must file if they had income while living in Arizona that exceeds the threshold. You use Form 140-PZ and report only the income earned during the months you lived in Arizona. Nonresidents who earned income in Arizona must file Form 140-NR even if they had no other Arizona connections.

If you are not required to file but had taxes withheld from your paychecks or made estimated tax payments, you should file anyway to get a refund. Many people overpay throughout the year and need to file to recover that money.

Arizona tax withholding and estimated payments

If you are an employee, your employer withholds Arizona state tax from your paycheck based on the W-4 form you complete. The withholding is separate from federal withholding — you fill out an Arizona W-4 (or indicate your withholding preference) with your employer. If you do not want any Arizona tax withheld, you can claim exemption, though this means you may owe tax when you file.

If you are self-employed or have income with no withholding, you may need to make quarterly estimated tax payments to Arizona. These are due on the 15th of April, June, September, and January. If you underpay estimated tax, Arizona may charge you a penalty and interest. You can avoid the penalty if you pay at least 90% of your current year tax or 100% of your prior year tax through withholding and estimated payments.

You can adjust your withholding at any time by submitting a new W-4 to your employer. If you expect a big refund, you are having too much withheld. If you expect to owe, you are not having enough withheld. Changing your withholding mid-year affects only future paychecks, not what has already been withheld.

Deductions and credits available on Arizona returns

Arizona allows you to claim either the standard deduction or itemized deductions, just like the federal return. The Arizona standard deduction amounts are set by the state and differ from federal amounts. For most people, the standard deduction is simpler — you do not have to track receipts or file additional forms.

Arizona offers several tax credits that reduce your tax dollar-for-dollar, which is more valuable than a deduction. These include credits for dependent care expenses, education expenses, and charitable contributions to certain organizations. Some credits are refundable, meaning you get money back even if you owe no tax. Others are nonrefundable, meaning they can only reduce your tax to zero.

If you paid property tax or rent in Arizona, you may be able to claim a property tax credit or rent credit. These are designed to help lower-income residents. The amounts vary by income and filing status, and you must meet specific requirements. The Arizona Department of Revenue publishes worksheets and instructions for each credit on its website.

How to file your Arizona state return

You can file your Arizona return by mail, electronically, or through a tax professional. Most people file electronically because it is faster and reduces errors. You can use tax software that supports Arizona returns, or you can file through the Arizona Department of Revenue's online system if you meet income limits.

If you file by mail, send your completed Form 140 (or 140-PZ or 140-NR) along with any required schedules and supporting documents to the Arizona Department of Revenue. Include a copy of your federal return. Mail returns to the address listed in the form instructions — it varies depending on whether you are enclosing a payment or expecting a refund.

If you file electronically, you need an electronic filing identification number (EFIN) if you are using a tax professional, or you can file directly through approved tax software. Electronic filing is faster and you receive confirmation that the return was received. Refunds are processed more quickly with electronic filing — typically within 30 days instead of 6 to 8 weeks for paper returns.

Frequently Asked Questions

Do I owe Arizona income tax if I moved out of state during the year?

You owe Arizona tax only on income earned while you were an Arizona resident. If you moved out mid-year, you file Form 140-PZ and report only the income from January through your move date. You may also owe tax to the state you moved to for income earned after you arrived there.

What happens if I do not file an Arizona return when I am supposed to?

Arizona charges penalties and interest on unpaid tax. The failure-to-file penalty is usually 5% per month (up to 25%) of the unpaid tax. Interest accrues daily at a rate set by the state. The longer you wait, the more you owe. If you owe a refund, there is no penalty for filing late, but you lose the refund if you do not file within three years.

Can I claim a credit for taxes I paid to another state?

Yes, Arizona allows a credit for income tax paid to another state on income that Arizona also taxes. The credit is limited to the lesser of the tax paid to the other state or the Arizona tax on that income. You cannot claim a credit for federal tax paid. You claim this credit on your Arizona return using the appropriate schedule.

Is Social Security income taxed by Arizona?

No, Arizona does not tax Social Security benefits. You do not report Social Security on your Arizona return, even though you may report it on your federal return. Other retirement income, such as pensions and IRA distributions, is generally taxable by Arizona unless it qualifies for a specific exemption.

What if I owe Arizona tax but cannot pay it all at once?

You can set up a payment plan with the Arizona Department of Revenue. Contact them to discuss your options — they may allow you to pay in installments. You still owe penalties and interest on the unpaid balance, but a payment plan prevents additional collection action. Filing your return on time, even if you cannot pay, reduces the penalties you face.