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AZ.gov Arizona's Official Web Site
State of Arizona
Department of Revenue
Setting the Standard for Tax Services
 

 

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 Arizona Withholding  for Wages Paid in Calendar Year 2013.
 
The Department prescribed new withholding tables in early 2010 in accordance with Senate Bill 1185 (Laws 2009, 1st Reg. Session, Chapter 2). The new tables were effective for wages paid after June 30, 2010.  The withholding tables were modified for wages paid after December 31, 2010.  There were no changes to the withholding tables for calendar year 2012 or 2013.

Arizona’s current withholding tables are based on a percentage of gross taxable wages. "Gross taxable wages" is the amount that meets the federal definition of "wages" contained in IRC § 3401 and that will generally be included in box 1 of the employee's federal Form W-2 at the end of the calendar year (i.e. gross wages net of pretax deductions, such as the employee's portion of health insurance premiums).

Each new employee subject to Arizona income tax withholding is required to complete Arizona Form A-4 within 5 days of employment.
 
Existing employees may complete Arizona Form A-4 to change the previous withholding amount or percentage.
 
Employees that expect no Arizona income tax liability for the calendar year may claim an exemption from Arizona withholding.  This exemption must be renewed annually, similar to federal requirements.

Individuals with a current withholding percentage elected on Arizona Form A-4P or Arizona Form A-4V may also complete a new form to change the previous withholding amount or percentage.

Withholding percentage options for wages paid after December 31, 2010.

 Rates are a percentage of gross taxable wages.

 Percentage Rates

 0.8%

 1.3%

 1.8%

 2.7%

 3.6%

 4.2%

5.1%

 

The 2014 Arizona Form A-4, Arizona Form A-4P, and Arizona Form A-4V are available on the
Department's website at http://www.azdor.gov/Forms/Withholding.aspx

Arizona Withholding Tax Basics

For Arizona purposes, an employer must withhold Arizona income tax from the payment of wages to an employee whose compensation is for services performed in Arizona.

Arizona income tax withholding is a percentage of the employee's gross taxable wages.
 
"Gross taxable wages" is the amount that meets the federal definition of "wages" contained in IRC § 3401 and that will be included in box 1 of the employee's federal Form W-2 at the end of the calendar year (i.e. gross wages net of pretax deductions, such as the employee's portion of health insurance premiums). Employees may also have their employer withhold an additional amount.
 
The employee completes Arizona Form A-4, Employee’s Arizona Withholding Percentage Election, to elect an Arizona withholding percentage. Amounts that are considered wages for federal tax purposes are also considered wages for Arizona income tax and withholding purposes.
 
Amounts that are included in wages and are subject to mandatory federal withholding are subject to mandatory Arizona withholding. Amounts that are excluded from wages and are excluded from mandatory federal withholding are excluded from mandatory Arizona withholding.
 
An employer must withhold Arizona tax from wages paid for services performed within Arizona regardless of whether the employee is a resident or nonresident of Arizona. However, there are two exceptions to the general mandatory withholding requirements for nonresident employees temporarily performing services for their employer in Arizona. Although a nonresident employee may be exempt from Arizona income tax withholding, the employee may be required to file a nonresident Arizona income tax return if the employee meets the filing requirement.
 
An employer may not have to withhold Arizona tax from wages paid to a nonresident performing services in Arizona if:
  • The employee is physically present in Arizona for less than 60 days in a calendar year for the purpose of performing a service that will benefit the employer; AND
  • The employer is an individual, fiduciary, partnership, corporation or limited liability company having property, payroll and sales in Arizona, or of a related entity having more than 50% direct or indirect common ownership.
An explanation of this exemption (including examples) is included in the Employer’s Instructions for the Arizona Form A-4.
 
Additionally, an employer may not have to withhold Arizona tax from wages paid to a nonresident performing services in Arizona if the individual would be allowed an income tax credit for taxes paid to his or her state of residence under A.R.S. § 43-1096. This exemption applies to nonresident employees who are residents of, or domiciled in, California, Indiana, Oregon, or Virginia.
 
For more information, see Arizona Form WEC.
 
Additionally, an employer may not have to withhold Arizona tax from wages paid to a nonresident employee who is the spouse of a servicemember.  This employee may claim an exemption from Arizona withholding on wages because: (i) the employee's spouse is a member of the armed forces present in Arizona in compliance with military orders; (ii) the employee is present in Arizona solely to be with their spouse; and (iii) the employee maintains a domicile in another state, which is the same state that is the domicile of the servicemember.
 
For more information, see Arizona Form WECM and Arizona Publication 705.

Arizona Withholding Rules & Statutes

Rules
These can be read online at the Arizona Secretary of State Website
A.A.C. R15-2b-101 Payment Schedule; Rates; Election by Employee A.A.C. R15-2B-102 Employment Excluded From Withholding
Statutes
The statues are available online at the Arizona State Legislature site
A.R.S 43-401 Withholding tax; rates; election by employee A.R.S 43-402 Definition of “employer”
A.R.S 43-403 Employment excluded from withholding A.R.S 43-404 Extension of withholding to military retirement pensions and to other annuities; definition
A.R.S 43-405 Extension of withholding to gambling winnings A.R.S 43-406 Extension of withholding to premature withdrawals of state and local government contributions
A.R.S 43-407 Extension of withholding to unemployment compensation payments A.R.S 43-408 Voluntary withholding on out-of-state wages
A.R.S 43-411 Employer entitled to address of employee A.R.S 43-412 Returns of withholding to be filed with department
A.R.S 43-413 Statement of withholding to employees A.R.S 43-414 Liability for failure to withhold
A.R.S 43-415 Withholding as trust fund for state A.R.S 43-416 Failure to remit withholding; classification
A.R.S 43-417 Withholding without resort to legal action A.R.S 43-431 Amounts withheld considered part payment of tax
A.R.S 43-432 Refund for excess withholding A.R.S 43-434 Exemption in case of nonresident employees
A.R.S 43-433 Remedies for withheld taxes A.R.S 43-435 Failure to collect and pay over tax; personal liability

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