If you live or work in Arizona, you’ll be glad to know the state has one of the simplest income tax systems in the country. Unlike many states with complicated brackets, Arizona charges a flat tax rate on all taxable income. That means you can calculate your liability in seconds once you know your income.
📊 Arizona State Income Tax Rate in 2025
As of 2025, Arizona has a flat income tax rate of 2.5%.
- Everyone pays the same percentage, whether you earn $30,000 or $300,000.
- There are no progressive brackets like the federal system.
- Formula:
Arizona Tax Liability = Taxable Income × 2.5%
This makes Arizona one of the lowest-tax states in the U.S.
🧾 Filing Thresholds (Do You Need to File?)
Not everyone earning income in Arizona must file a state tax return. Filing is required if your gross income meets or exceeds:
- Single filer: $14,600
- Married filing jointly: $29,200
- Head of household: $21,900
👉 Even if you don’t meet these thresholds, you may still want to file if you had tax withheld from your paycheck and could get a refund.
💵 Real-World Example Calculations
Let’s look at how much you would owe in state tax at different income levels:
| Annual Income | AZ State Tax (2.5%) | Monthly Liability | Effective Rate |
|---|---|---|---|
| $30,000 | $750 | $62.50 | 2.5% |
| $50,000 | $1,250 | $104.17 | 2.5% |
| $75,000 | $1,875 | $156.25 | 2.5% |
| $120,000 | $3,000 | $250.00 | 2.5% |
| $250,000 | $6,250 | $520.83 | 2.5% |
Notice how the effective tax rate is always 2.5% since Arizona doesn’t use multiple brackets.
⚖️ Arizona vs Federal Taxes
- Federal income tax is progressive, ranging from 10% to 37%.
- Arizona income tax is flat at 2.5%.
👉 Example: On a $75,000 salary, you may owe around $8,600 in federal income tax but only $1,875 in Arizona state tax.
👵 Retiree & Special Exemptions
Arizona is considered retiree-friendly because of certain exemptions:
- Social Security income: Not taxed in Arizona.
- Military retirement pay: Up to $3,500 excluded.
- Public pensions: Some exclusions apply.
- Property tax relief: Programs available for seniors and disabled residents.
This means retirees often pay very little state tax compared to working residents.
🧮 Step-by-Step Calculation Flow
If you want to estimate your liability manually:
- Start with your gross income.
- Subtract pre-tax deductions (retirement contributions, health insurance premiums, etc.).
- Subtract federal adjustments to get your Arizona taxable income.
- Multiply by 2.5%.
Example:
- Gross income: $60,000
- Pre-tax 401(k) contributions: $6,000
- Arizona taxable income: $54,000
- State tax = $54,000 × 0.025 = $1,350
❓ Frequently Asked Questions
1. What is Arizona’s income tax rate?
It’s a flat 2.5% of all taxable income starting in 2025.
2. How much tax will I pay on $100,000 in Arizona?
You’ll owe about $2,500 in state tax before deductions or credits.
3. Do retirees pay Arizona state income tax?
Not on Social Security benefits. Military and certain pensions may also qualify for exclusions.
4. Do I pay Arizona tax if I’m a part-year resident?
Yes, but only on the income you earned while living or working in Arizona.
5. Are there local income taxes in Arizona?
No. Unlike some states, Arizona does not allow city or county income taxes.
Robert is the creator of StateTaxesEstimator.com, a trusted resource dedicated to helping users accurately estimate their state taxes. With a strong focus on clarity and precision, Robert combines expert knowledge with practical tools to simplify complex tax calculations. His mission is to empower individuals and businesses to make informed financial decisions with confidence and ease.