Personal income tax
Arizona collects income taxes from its residents at the following rates.
For single and married filing separately taxpayers:
- 2.59 percent on the first $10,000 of taxable income.
- 2.88 percent on taxable income between $10,001 and $25,000.
- 3.36 percent on taxable income between $25,001 and $50,000.
- 4.24 percent on taxable income between $50,001 and $150,000.
- 4.54 percent on all taxable income more than $150,000.
For married persons filing joint returns and heads of households, the rates remain the same but the income brackets are doubled.
Arizona income tax forms are due April 15, or the next business day if that date falls on a weekend or holiday.
Arizona law requires a taxpayer to add certain items to Arizona gross income. One of the items a person must add is interest income from non-Arizona municipal bonds.
Arizona Transaction Privilege Tax (sales) and Use Tax rates increased to 6.6 percent effective July 1, 2010. 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.
All 15 Arizona counties levy an addtional sales tax.
Incorporated municipalities also levy separate transaction privilege/sales taxes.
The Arizona Department of Revenue collects city privilege taxes for most of the state's municipalities; these are known as program cities.
Nonprogram cities, however, collect their own taxes, and sales must be reported directly to the applicable city officials.
Personal and real property taxes
Tax jurisdictions set tax rates on the basis of the total assessed valuation within their boundaries and the amount of the levy to be raised. Total tax rates may vary considerably from one area to another.
Owner-occupied residential properties are valued by local assessors using one of two methods: replacement cost new less depreciation or sales analysis. Each assessor selects which method to use based upon technical considerations such as the accuracy of each method for that area and the number of sales available for analysis.
Arizona also taxes personal property, which is defined as all types of property except real estate. Taxable personal property includes property used for commercial, industrial and agricultural purposes. Personal property is considered to be movable and not permanently attached to real estate.
Personal property taxes are due Oct. 1. If the tax amount is over $100, one-half is due Oct. 1 and the remainder is due the following March 1. One-half of the amount of the taxes that are unpaid is delinquent after Nov. 1 and the remaining half that is unpaid is delinquent after May 1. Read more about personal property taxes in a brochure from the Arizona Department of Revenue.
In lieu of a personal property tax on automobiles, the state imposes an annual vehicle license tax, or VLT, which is based on an assessed value of 60 percent of the manufacturer's base retail price reduced by 16.25 percent for each year since the vehicle was first registered in Arizona. For additional information on this tax, please call the Arizona Department of Transportation, Vehicle License Division: (602) 255-0072 in the Phoenix area, (520) 629-9808 in the Tucson area and (800) 251-5866 elsewhere in Arizona.
Inheritance and estate taxes
For estates of individuals who died after 2004, Arizona no longer imposes an estate tax.
Neither does the state impose an inheritance or gift tax.
Other Arizona tax facts
Arizona taxpayers may pay their income taxes by e-check, credit card or debit card. This option is available to electronic and paper filers.
Qualifying Arizona taxpayers, both individuals and businesses, can apply for a state tax credit for renewable energy produced by a qualified energy generator.