Does Arizona have a state income tax? Yes, a flat 2.5% for 2026

Yes, Arizona has a state income tax. For 2026, as for 2025, it is a flat 2.5% of Arizona taxable income, whatever your filing status or income. Residents pay it on all their income, wherever it is earned. Nonresidents pay it only on income from Arizona sources, such as wages for work done in Arizona, rent from Arizona property or a gain on Arizona real estate.

Arizona moved to the single rate in tax year 2023; for 2022 it taxed income at two rates, 2.55% and 2.98%. The rate applies after Arizona’s own subtractions, exemptions and deductions. For 2025, a single filer with $60,000 of federal adjusted gross income, no other Arizona adjustments and the $15,750 standard deduction had $44,250 of taxable income and about $1,106 of tax before credits.

There is no local income tax on top. Arizona law reserves income tax to the state: no county, city, town or other political subdivision may levy one as long as the state keeps up its urban revenue sharing fund. Through that fund, incorporated cities and towns receive 18% of the state’s net income tax collections from two years earlier, the share since fiscal year 2023-2024.

For 2025, you must file if your gross income was more than $15,750 as a single filer or a married person filing separately, $23,625 as head of household, or $31,500 for a married couple filing jointly. By law the threshold is the standard deduction as indexed for inflation, so the 2026 thresholds will follow the 2026 standard deduction. Count gross income as on your federal return, then leave out income Arizona does not tax, such as Social Security benefits, interest on U.S. government obligations, military pay and military retirement pay.

Nonresidents compare their income with the same amounts multiplied by the share of their federal adjusted gross income that comes from Arizona. Part-year residents count all income from the months they lived in Arizona plus Arizona-source income for the rest of the year. Below the thresholds, you still need to file to get back Arizona tax withheld from your pay.

Arizona starts from federal adjusted gross income, so the Arizona Department of Revenue (ADOR) tells you to finish the federal return first. Arizona is a community property state: a married couple filing separate Arizona returns each reports half the community income plus their own separate income, and both must either itemize or take the standard deduction. A joint return where one spouse was a nonresident or part-year resident goes on Form 140NR or 140PY, not Form 140.

Arizona returns for a calendar year are due April 15 of the following year, so 2026 returns are due April 15, 2027; 2025 returns were due April 15, 2026. You can get an automatic six-month extension, to October 15, 2027 for 2026 returns, by filing Arizona Form 204 by the April due date or by relying on a federal extension, which Arizona accepts for the period it covers. Nonresident aliens have the same April 15 Arizona due date even when their federal return is due in June.

An extension gives more time to file, not to pay. Under the 2025 instructions, interest at the federal rate runs on unpaid tax from the April due date, and unless you pay at least 90% of the tax by then, an extension underpayment penalty of 0.5% of the unpaid tax applies for each 30 days, up to 25%. Filing late costs 4.5% of the tax for each month or part of a month, up to 25%, and paying late 0.5% a month, up to 10%. If you amend your federal return, Arizona requires Form 140X for the same year.

You must make estimated payments during 2026 if your Arizona gross income was more than $75,000 in 2025 and will be more than $75,000 in 2026, or more than $150,000 in both years for a married couple filing jointly. For a full-year resident, Arizona gross income is federal adjusted gross income. Payments plus withholding must reach 90% of your 2026 tax or 100% of your 2025 tax, and the penalty for falling short equals the interest on the shortfall, capped at 10% of it.

For 2025, Arizona’s standard deduction matches the federal one: $15,750 for single filers and married people filing separately, $23,625 for heads of household and $31,500 for married couples filing jointly. Arizona law indexes these amounts for inflation the same way as the federal standard deduction, and ADOR had not published the 2026 figures as of October 2026. Standard deduction filers can add part of their charitable gifts: 34% of them for 2025, and for 2026 the full amount, up to $1,000, or $2,000 for a married couple filing jointly.

Itemizing starts from federal Schedule A, with Arizona changes: you can deduct the full amount of your medical and dental expenses rather than only the part allowed federally, and from 2026 the deduction for state and local taxes is limited to $10,000. Before the deduction, Arizona subtracts exemptions set at fixed amounts in state law: $2,100 for each taxpayer 65 or older, $1,500 for each taxpayer who is blind, $10,000 for each parent or grandparent 65 or older who lives with you all year, needs help with daily living and gets more than half their support from you, and $2,300 for certain others, such as a person 65 or older for whom you paid more than $800 of medical or home health care costs.

Credits come straight off the tax. The dependent tax credit is $100 for each dependent under 17 for 2025 and $125 for 2026, plus $25 for each dependent 17 or older; it shrinks by 5% for each $1,000, or part of $1,000, of federal adjusted gross income over $200,000, or $400,000 on a joint return. It is nonrefundable, like the family income tax credit, so it can cut your tax to zero but not below.

Arizona’s credits for donations pay back cash gifts to certain organizations dollar for dollar, up to the limits below. A credit comes off the tax itself, not off taxable income, so a $506 gift to a qualifying charity can cut a single filer’s 2026 tax by $506. The credits are nonrefundable, but an amount you cannot use can be carried forward for up to five years.

A gift made from January 1 through April 15, 2027 can go on either the 2026 or the 2027 return, at that year’s limit. You need the organization’s code from ADOR’s lists of qualifying charities and certified school tuition organizations, or a public school’s CTDS number, and a gift that earns a credit cannot also be deducted as a charitable contribution.

The two school tuition organization credits pay for scholarships at Arizona private schools. You must give the full amount for the original credit before the switcher credit applies, and neither is allowed if you designate the gift for your own dependent. The public school credit covers fees paid or gifts made to an Arizona district or charter school for extracurricular activities, character education, standardized testing and, through June 30, 2029, items such as capital purchases, school meal programs and playground equipment.

Arizona does not tax Social Security benefits or Railroad Retirement Act benefits. Any part of your benefits that is taxable on your federal return is subtracted on the Arizona return, so Arizona taxes none of it.

Government pensions get a smaller break, a fixed amount in state law: you, and your spouse on a joint return, can each subtract up to $2,500 a year of pension income from the federal civil service and foreign service systems, other retirement plans established by federal law, the Arizona State Retirement System and Arizona’s other public plans, including those for county, city and town employees. Public pensions from other states do not qualify, and Arizona has no general exclusion for private pensions or for withdrawals from IRAs and 401(k) plans, so those are taxed at 2.5%.

Military retirement is fully exempt: since tax year 2021, Arizona lets you subtract all retired or retainer pay from the uniformed services, and a surviving spouse can exclude all such payments too. Active-duty pay is subtracted as well, on Form 140, and a service member stationed in Arizona who is not a resident owes no Arizona tax on military pay. An Arizona resident who joins the service stays a resident, wherever stationed, until establishing a new domicile.

The July 2025 tax law (Public Law 119-21) created federal deductions, for 2025 through 2028, for qualified tips, qualified overtime pay and interest on certain car loans, plus an extra $6,000 deduction for each person 65 or older. Arizona’s tax starts from federal adjusted gross income, and updating Arizona’s tie to the federal tax code does not carry these deductions over by itself, so the state had to add them.

It did so in Laws 2026, chapter 140 (HB 4168), signed on June 13, 2026. The law ties Arizona to the Internal Revenue Code as in effect on January 1, 2026, and, starting with 2025, lets you subtract the amounts you deducted on your federal return for qualified tips, qualified overtime and the senior deduction. The car loan interest subtraction is for 2025 only. Tips and overtime beyond what you could deduct federally stay taxable in Arizona.

Under a November 2025 executive order, ADOR had already built these into the 2025 forms, through its Middle Class Tax Cuts Package worksheet and the other-subtractions schedule of Form 140. They cannot be claimed on Form 140A or 140EZ, and for 2025, part-year residents and nonresidents may subtract only tips and overtime included in Arizona gross income. ADOR said in January 2026 that taxpayers who must amend a 2025 return because of conformity would not owe penalties or interest if they amend by October 15, 2027.

You are an Arizona resident if Arizona is your domicile, the permanent home you return to after time away, or if you are in Arizona for other than a temporary or transitory purpose. Arizona law presumes you are a resident if you spend more than nine months of the year in the state, though evidence that the stay is temporary can overcome that, and someone domiciled in another state can still be an Arizona resident for income tax. ADOR looks at where you and your family live, your car registration, driver’s license, bank accounts and business ties, home purchases and sales, property and income taxes paid, voter registration and the address you use, and no single factor decides it.

In the year you move in or out, you file Form 140PY as a part-year resident, reporting all income from your months as a resident, wherever earned, plus Arizona-source income from the rest of the year. The standard deduction is not prorated, but exemptions and the dependent tax credit are, by the share of your federal adjusted gross income that Arizona taxes. If you start work in Arizona in 2026, you choose a withholding rate of 0.5% to 3.5% of gross taxable wages on Form A-4 within five days; without it, your employer withholds 2.0%.

When Arizona and another state tax the same income, Form 309 gives an Arizona resident a credit for net income tax paid to the other state on income from that state, but only where that state does not give Arizona residents the credit itself. You must file a return there, since withholding alone does not count, and income tax paid to a city or county is not covered. For 2025, ADOR’s instructions treat California, Indiana, Oregon and Virginia differently.