Are you considering moving to the beautiful Grand Canyon State of Arizona? If so, this will provide you with information regarding your personal, business and local tax requirements; but first here is a list of quick links that will direct you to State agencies that can provide you with more information about our great State:
For complete details, refer to the Arizona Revised Statutes and the Arizona Administrative Code. In case of inconsistency or omission in this document, the language of the Arizona Revised Statute and the Arizona Administrative Code will prevail.
Arizona Revised Statutes (A.R.S.) § 25-211 provides that all property acquired by either husband or wife during marriage is community property, except that which is acquired by gift or by inheritance. Generally income from community property is divided equally between both spouses.
The filing requirements are explained at the beginning of the instructions on all Arizona income tax returns. All tax forms can be located on our website under the category “Forms”.
You must file if you are:
|AND your gross income is at least:
||OR your Arizona Adjusted Gross Income is at least:
|Married filing joint
|Married filing separate
|Head of household
For Arizona filing purposes, figure your gross income the same as you would figure your gross income for federal income tax filing purposes. Then, you should exclude income Arizona law does not tax.Income Arizona law does not tax includes:
- Interest from U.S. Government obligations
- Social security retirement benefits received under Title II of the Social Security Act
- Benefits received under the Railroad Retirement Act
- Active duty military pay
- Pay received for active service as a reservist or a National Guard member.
Yes. Arizona will tax your retirement from another state.
Yes, an Arizona resident is subject to tax on all income wherever derived from.
As a general rule, the same portion of your pension that is taxable for federal purposes will be taxable for Arizona purposes. However, there is a subtraction, of up to $2,500, for pension income received from the State of Arizona and its political subdivisions or from U.S. government service, including the U.S. military.
Whether one is considered an Arizona resident depends on the facts and circumstances of each case. For guidance in determining whether or not you are an Arizona resident, please refer to Arizona Individual Income Tax Procedure ITP 92-1.
Arizona law provides that Arizona residents are taxable on the same income that they report for federal income tax purposes, subject only to the specific modifications allowed under Arizona tax law. If you are taxed on income earned in another state by both Arizona and the other state, you may be able to claim a credit for taxes paid to that other state. See the Form 309 instructions for additional information.
As a part-year resident, you are subject to Arizona tax on any income you earned in Arizona while an Arizona resident and any income you earned from an Arizona source before moving to (or after leaving) the State. If you are subject to tax by both Arizona and another state on the same income, you may be eligible for a tax credit. For more information, see Arizona Form 309.
For income tax rates, please refer to the Tax Tables for the Arizona Form you are using.
Tax Tables are located in the Forms category for Individual Income. Use the Tax Table that is applicable to the tax year you need and your filing status for that year.
Arizona withholding rates may change periodically. So please refer to Arizona Form A4 instructions for the tax period that is applicable to you.
A person may take a standard deduction or the person may itemize deductions. The standard deduction is indexed annually for inflation.
A person may claim itemized deductions on the Arizona return even if the person takes a standard deduction on the federal return. For the most part, a person may claim those deductions allowable as itemized deductions under the Internal Revenue Code.
For standard deduction amount, please refer to the instructions of the Arizona form and tax year that is applicable to you.
The amount you may claim as a personal exemption depends on your filing status. For personal exemption amounts, please refer to the instructions and tax year of the Arizona form that is applicable to you.
A taxpayer may claim an additional exemption for being blind or over age 65. For exemption amounts, please refer to the instructions and tax year of the Arizona form that is applicable to you.
Exemption amounts are noted on the Exemptions section of your Arizona tax form. Arizona allows an exemption for each of the following:
- A person who qualifies as your dependent on your federal tax return.
- A stillborn child if all of the following apply:
- The stillbirth occurred during the taxable year.
- You received a certificate of birth resulting in stillbirth from the Arizona Department of Health Services.
- The child would have otherwise been a member of your household.
A taxpayer may also claim an exemption for each person who is age 65 or older (related to you or not) who does not qualify as your dependent on your federal return, but one of the following applies:
- During the tax year, you paid more than one-fourth of the cost of keeping this person in an Arizona nursing care institution, an Arizona residential care institution, or an Arizona assisted living facility. Your cost must be more than $800.00.
- During the tax year, you paid more the $800 for either Arizona home health care or other medical costs for the person.
An Arizona resident may claim an exemption for his or her parent or ancestor of his or her parent. A qualifying parent or ancestor of your parent may be any one of the following:
- Your parent or your parent’s ancestor. Your parent’s ancestor is your grand parent, great grand parent, great great grand parent, etc.
- If married filing a joint return, your spouse’s parent or an ancestor of your spouse’s parent.
You may claim this exemption if all of the following apply:
- The parent or ancestor of your parent lived in your principal residence for the entire taxable year.
- You paid more than one-half of the support and maintenance costs of the parent or ancestor of your parent during the taxable year.
- The parent or ancestor of your parent was 65 years or older during the taxable year.
- The parent or ancestor of your parent required assistance with activities of daily living, like getting in and out of bed or chairs, walking around, going outdoors, using the toilet, bathing, shaving, brushing teeth, combing hair, dressing, medicating or feeding.
Arizona Transaction Privilege Tax (sales) and Use tax rates generally are 5.6%. Currently, all fifteen counties levy a tax. County rates range from .5% to 1.125%. The state rate on transient lodging (hotel/motel) is 5.5%. The state of Arizona does not levy a state tax on food for home consumption or on drugs prescribed by a licensed physician or dentist. However, some cities in Arizona do levy a tax on food for home consumption. City rates range from 1% to 4.25%.
For Arizona income tax purposes, if a taxpayer changes from a nonresident to a resident during the taxable year, the taxpayer’s Arizona taxable income for that year must include all deductions realized or recognized during the period the individual was a resident. Moving expenses are realized after the move is complete. Therefore, moving expenses which are deductible under federal law (deducted in computing federal adjusted gross income), and are incurred to move into Arizona by an individual who is establishing Arizona residency are deductible on the Arizona income tax return. Moving expenses incurred to move from Arizona by an individual who is abandoning Arizona residence or incurred by a nonresident to move between two locations are not deductible.
The starting point for the Arizona income tax computation for a resident individual is the federal adjusted gross income. This amount is then subject to certain additions and subtractions to arrive at Arizona taxable income. There is no specific treatment of gain realized from the sale of a personal residence in the Arizona statutes. Therefore, to the extent the gain is excluded from federal adjusted gross income, it will likewise be excluded from Arizona gross income and not subject to Arizona income tax. However, to the extent the gain is included in federal adjusted gross income; it will likewise be included in Arizona gross income and subject to Arizona income tax.
You have to file a tax return reporting any income earned in Arizona only if you exceed the amounts listed in the filing requirements stated in the Arizona income tax return instructions. If you do not exceed these requirements, you may want to file anyway to obtain a refund for any Arizona income tax that may have been withheld from your earnings.