Arizona Income Tax Rate
2.50% flat rate
Everyone pays 2.50% of taxable income, regardless of income level or filing status.
What People Get Wrong
“A flat tax means I'll pay 2.5% of my whole salary in Arizona.”
Arizona's 2.5% applies only to income above the standard deduction ($16,100 single, $32,200 married), so most earners pay well under 2.5% of salary. Someone earning $75,000 pays $1,473 (2.0%), while the same earner in a flat-tax state like Illinois would pay $3,713 (4.95% flat).
“Arizona's income tax is complicated.”
Arizona uses one flat 2.5% rate for every income level and filing status, so there are no brackets to track. A raise is taxed at the same 2.5% as the rest of your pay, and only the standard deduction separates your effective rate from the flat rate.
“Arizona taxes all retirement income like other states.”
Arizona exempts Social Security and most retirement income (pensions, 401(k), IRAs) from state income tax, making the state very attractive for retirees. Combined with the low flat income tax rate (2.5%), Arizona is one of the most tax-friendly states for retirees, even compared to zero-income-tax states that may tax retirement income differently or rely more heavily on sales or property taxes.
Key Facts That Affect Your Take-Home Pay
- Arizona taxes income at a single flat 2.5% rate, the lowest of any flat-tax state, applied after a standard deduction that matches the federal amount ($16,100 for single filers, $32,200 for married couples filing jointly).
- Because the 2.5% rate applies only after the standard deduction, Arizona's effective rates stay very low: a $75,000 earner pays $1,473 (2.0% of salary) and a $200,000 earner pays $4,598 (2.3%).
- Arizona does not charge income tax at the local level, ensuring uniform tax withholding across the state. All Arizonans face the same flat 2.5% state rate.
