Arizona State Income Tax Guide 2025-26
Arizona features a relatively moderate state income tax system compared to neighboring California. With rates ranging from 2.55% to 4.5%, Arizona strikes a balance between revenue generation and taxpayer affordability. This guide covers everything you need to know about Arizona state taxes for the 2025-26 tax year.
Arizona Tax Rates & Brackets 2025-26
Arizona simplified its tax structure in recent years, reducing the number of brackets from five to four:
| Tax Rate | Single Filers | Married Filing Jointly |
|---|---|---|
| 2.55% | Up to $27,272 | Up to $54,544 |
| 2.98% | $27,273 - $54,544 | $54,545 - $109,088 |
| 3.34% | $54,545 - $163,632 | $109,089 - $327,263 |
| 4.5% | Over $163,632 | Over $327,263 |
Arizona Standard Deduction 2025
Arizona conforms to federal standard deductions, making tax preparation simpler:
- Single filers: $13,850
- Married filing jointly: $27,700
- Head of household: $20,800
- Married filing separately: $13,850
These amounts match the federal standard deduction, simplifying calculations for most taxpayers.
💡 Why Arizona Is Attractive for Remote Workers
With moderate tax rates (top rate of 4.5% vs California's 14.4%), no Social Security tax, and lower cost of living, Arizona has become increasingly popular with remote workers relocating from high-tax states. Cities like Phoenix, Scottsdale, and Tucson offer urban amenities at lower tax costs.
Who Must File an Arizona Tax Return?
You must file an Arizona state tax return if you meet any of these criteria:
- Full-year residents with Arizona gross income exceeding $13,850 (single) or $27,700 (married)
- Part-year residents who earned income while living in Arizona
- Non-residents with Arizona-source income (rental property, business income, etc.)
- You had Arizona taxes withheld from wages and want a refund
- You qualify for refundable tax credits
Arizona Tax Credits & Benefits
🎓 School Tax Credit
Arizona offers unique tax credits for donations to public schools, private school tuition organizations, and certified school tuition organizations. Credits up to $200 (single) or $400 (married) for qualifying donations.
🌵 Property Tax Credit
Arizona property owners may qualify for income-based property tax credits, particularly beneficial for seniors and lower-income homeowners.
💼 Increased Excise Tax Credit
For businesses subject to Arizona's transaction privilege tax, credits may apply against income tax liability in certain industries.
👶 Dependent Tax Credit
Arizona offers $100 exemption credit per dependent (including qualifying children and other dependents), subject to income phase-outs.
Frequently Asked Questions
Tax Calculation Examples
📊 Example 1: Single Filer Earning $60,000
- Gross Income: $60,000
- Standard Deduction: -$13,850
- Taxable Income: $46,150
- Estimated Arizona Tax: ~$1,224
- Effective Rate: 2.04%
This taxpayer falls into the 2.98% bracket but pays a much lower effective rate due to the progressive structure and standard deduction.
📊 Example 2: Married Couple Earning $120,000
- Gross Income: $120,000
- Standard Deduction: -$27,700
- Taxable Income: $92,300
- Estimated Arizona Tax: ~$2,526
- Effective Rate: 2.11%
Even at $120K household income, this couple's effective Arizona tax rate remains very modest at just over 2%.
📝 Important Disclaimer
This calculator provides estimates based on the 2025-26 Arizona tax brackets and standard deductions. Your actual tax liability may differ based on itemized deductions, credits, and other factors. For personalized tax advice, consult a licensed Arizona tax professional. Tax laws change frequently—always verify current rates with the Arizona Department of Revenue.