Key Tax Facts: Arizona
- Flat 2.5% rate - one of the lowest flat rates in the U.S.
- Conforms closely to federal adjusted gross income as starting point
- Arizona does not tax Social Security benefits
- No city income tax, but transaction privilege tax applies to businesses
Estimate Your 2026 Federal and Arizona State Income Tax
Arizona State Income Tax Overview
Arizona has a flat state income tax rate of 2.5% on all taxable income as of 2023, following SB 1828 (2021), which phased the state to a single rate ahead of schedule. This replaced the previous graduated bracket system and makes Arizona one of the simpler states for income tax calculation. Arizona conforms to the federal standard deduction, which is $15,750 for single filers and $31,500 for married couples filing jointly for tax year 2025. Arizona also allows personal exemptions and a range of deductions and credits, including for dependents and charitable contributions made to qualifying organizations in the state.
What Is Different About Arizona's Income Tax
Deductions and exemptions
Arizona uses the federal standard deduction amounts and lets filers who take the standard deduction add 33% of their charitable contributions on top of it. Itemizers generally follow federal Schedule A with state adjustments. Dependent exemptions were replaced by a per-dependent credit.
Credits worth knowing
Arizona is unusual for its dollar-for-dollar credits for donations to qualifying charitable organizations, public schools, and school tuition organizations, each with its own annual cap. There is also a family income tax credit for lower-income households and a dependent tax credit of $100 per child under 17.
Retirement, capital gains, and other income
Social Security is exempt. Up to $2,500 of federal civil service and Arizona state or local government pensions is exempt, and military retirement pay is fully exempt. All other retirement distributions and capital gains are taxed at the 2.5% flat rate.
Rules summarized from the Arizona Department of Revenue guidance for tax year 2026. Amounts that index annually are described in general terms; confirm the current figure on the official form instructions.
Arizona Income Tax Rate (2026) projected
Arizona uses a flat income tax rate -- the same percentage applies to all taxable income regardless of how much you earn.
Source: Arizona Department of Revenue
What a Arizona Resident Actually Pays: A Worked Example
| Taxable Income | $65,000.00 |
| Arizona Flat Rate | 2.5% |
| Estimated State Tax | $1625.00 |
| Effective Rate | 2.5% |
Where Arizona Stands Among the 50 States
Arizona's top rate of 2.5% ranks #40 of the 41 states that tax wages -- among the ten lowest of the states that levy the tax at all. The median top rate across those 41 states is 5.2%, so Arizona is below the middle of the pack. It is one of 14 states with a single flat rate, so every taxable dollar is taxed at 2.5% and the effective rate never climbs with income the way it does in the 27 graduated-rate states.
On sales tax the picture is different: Arizona's combined state and average local rate of 8.37% ranks #11 of 50, against a national median of 7.00%.
Arizona State Tax at Five Income Levels (2026, single filer)
| Taxable income | Arizona tax | Effective rate | Marginal rate |
|---|---|---|---|
| $40,000 | $1,000 | 2.50% | 2.5% |
| $65,000 | $1,625 | 2.50% | 2.5% |
| $100,000 | $2,500 | 2.50% | 2.5% |
| $150,000 | $3,750 | 2.50% | 2.5% |
| $250,000 | $6,250 | 2.50% | 2.5% |
Brackets applied directly to the taxable-income figure shown, before Arizona-specific deductions, exemptions, or credits. Federal tax is separate and comes on top of every row.
Arizona vs. Its Neighbors on $75,000 of Taxable Income
A Arizona resident with $75,000 of taxable income pays about $1,875 in state income tax. Of Arizona's 5 neighboring states, 1 would tax that income less and 4 would tax it more.
| State | Structure | Tax on $75,000 | Top rate | Sales tax |
|---|---|---|---|---|
| Arizona (you) | Flat | $1,875 | 2.5% | 8.37% |
| Nevada | No income tax | $0 | None | 8.23% |
| New Mexico | Rate to 5.9% | $3,133 | 5.9% | 7.82% |
| Colorado | Rate to 4.4% | $3,300 | 4.4% | 7.77% |
| Utah | Rate to 4.5% | $3,375 | 4.5% | 7.19% |
| California | Rate to 13.3% | $3,517 | 13.3% | 8.82% |
Frequently Asked Questions -- Arizona Income Tax
Does Arizona have a state income tax?
Yes. Arizona imposes a state income tax with a flat rate of 2.5%. This is separate from your federal income tax obligation.
What is the Arizona income tax rate for 2026?
Arizona uses a flat income tax rate of 2.5% on all taxable income, regardless of income level or filing status.
Do I have to file a Arizona state tax return?
Most full-year Arizona residents with income above the state filing threshold must file a state return. Check the Arizona Department of Revenue for current thresholds and requirements.
How accurate is this estimate?
The federal figure uses the official IRS 2026 brackets and standard deduction. The Arizona figure applies the 2026 single-filer rate schedule to the same taxable income; it does not model Arizona-specific deductions, exemptions, credits, or local income taxes, so treat it as a planning number and confirm with the Arizona Department of Revenue or a tax professional before filing.
How does Arizona compare with nearby states?
On $75,000 of taxable income, Arizona collects about $1,875. Nevada collects $0, New Mexico collects $3,133, Colorado collects $3,300, Utah collects $3,375, California collects $3,517. See the comparison table above.
Where does Arizona rank on state income tax?
Arizona's top rate of 2.5% ranks #40 of the 41 states with an income tax, against a median top rate of 5.2%. Its combined sales tax of 8.37% ranks #11 of 50.
Does this calculator include federal income tax?
Yes. It estimates your 2026 federal income tax using the official IRS 2026 brackets, then applies the Arizona rate schedule to the same taxable income and shows both figures plus the combined total.
Where can I find official Arizona tax forms?
Official forms, instructions, and filing guidance are available at the Arizona Department of Revenue.
What is the sales tax rate in Arizona?
Arizona's combined state and average local sales tax rate is 8.37%. This is separate from income tax and applies to most retail purchases -- use our sales tax calculator to check a specific purchase.
When are Arizona 2026 state taxes due?
2026 taxes are generally filed in 2027. The Arizona filing deadline is April 15, 2027, the same as the federal deadline.
Understanding Your Arizona Tax Estimate
Your results combine two separate bills: federal tax owed to the IRS, and Arizona state tax owed to the Arizona Department of Revenue. The state return is filed separately from your federal Form 1040, with a state filing deadline of April 15. For the mechanics of how bracket math actually works -- why your effective rate is almost always lower than your top bracket -- see our marginal vs. effective tax rate guide.
Lowering Your Arizona Bill
Pre-tax retirement contributions reduce your federal and Arizona taxable income in the same move -- see our 401(k) contribution limits and HSA limits guides for the current caps. Beyond that, Arizona-specific credits and deductions that don't exist at the federal level are listed at the Arizona Department of Revenue -- worth checking, since these are easy to miss if you only look at federal guidance.
Combined Sales + Income Tax Picture
Arizona's combined state-plus-average-local sales tax rate is 8.37%. If you're self-employed, that's an added layer on top of income tax -- our self-employment tax calculator covers the SE-specific piece separately.
Disclaimer: Estimates for educational purposes only. State tax results are approximations based on published bracket data and do not account for all deductions, credits, exemptions, local taxes, or individual situations. Not tax, legal, or financial advice. Consult the Arizona Department of Revenue or a qualified tax professional for guidance specific to your situation.