State & Local Taxes

Arizona State Income Tax: 2026 Flat Rate Explained

By The Ledgerism Editorial Team · The Ledgerism Brief Editorial Team produces original, methodology-disclosed accounting and tax research—data trackers, databases, and reference guides built to be the most-cited source in the field. Every figure is verified against primary sources including FASB, the IRS, the PCAOB, NASBA, the AICPA, and state boards of accountancy.

Arizona state income tax is a flat 2.5% on all taxable income in 2026, the lowest flat income tax rate of any U.S. state. There are no brackets, no surcharge on high earners, and no city or county income tax layered on top. A resident earning $60,000 in Arizona taxable income and a resident earning $600,000 pay the same 2.5% rate on each dollar of taxable income.

The rate reached 2.5% in 2023, ahead of the schedule set by 2021 legislation that had planned a multi-year phase-down from the prior top rate of 4.5%. Because the rate is flat, your Arizona marginal rate and your Arizona effective rate on taxable income are effectively the same, which is not true for the graduated federal system.

What is the Arizona state income tax rate in 2026?

The Arizona state income tax rate is 2.5% for tax year 2026, applied as a single flat rate to all taxable income regardless of filing status or income level. Arizona does not use graduated brackets. The same 2.5% applies to the first dollar of taxable income and the last, whether you file single, married filing jointly, married filing separately, or head of household.

Arizona also applies a 2.5% rate to the optional small business income tax on Form 140-SBI, which lets certain taxpayers report Schedule K-1 and other qualifying small business income separately. For most individual filers, the single flat rate keeps the state calculation short: taxable income multiplied by 0.025.

Does Arizona’s standard deduction match the federal amount?

Yes. Arizona sets its standard deduction equal to the federal standard deduction under Internal Revenue Code Section 63, so the amounts move each year with the federal inflation adjustments. For 2026 that means the same figures a taxpayer would use on the federal return, which simplifies the state calculation for filers who do not itemize.

For tax year 2026, the federal (and therefore Arizona) standard deduction amounts are:

Arizona taxpayers can itemize instead, and Arizona itemized deductions generally start from the federal Schedule A amounts with state-specific adjustments. Whether the standard deduction or itemizing produces a lower Arizona bill depends on your mortgage interest, state and local taxes, charitable gifts, and similar items. See our guide on choosing between the standard and itemized deduction for the trade-off.

Is there a local income tax in Arizona?

No Arizona city, county, or municipality levies a personal income tax. The flat 2.5% state rate is the only income tax an Arizona wage earner pays to a state or local government. This differs from states such as New York, Ohio, or Pennsylvania, where local jurisdictions can add their own income or wage taxes on top of the state rate.

Arizona does levy a state and local transaction privilege tax (its sales tax), and property taxes are assessed at the county level, but neither touches personal income. For a worker comparing take-home pay across states, the absence of a local income tax layer can matter as much as the low state rate itself.

Who is an Arizona resident for income tax?

Arizona residency for income tax turns on domicile, meaning the place you treat as your permanent home and intend to return to, not simply where you spend a season. An Arizona resident is generally a person domiciled in the state or one who is in Arizona for other than a temporary or transitory purpose. Residency, not physical location of an employer, drives how much income Arizona can tax.

Arizona applies a nine-month presumption: an individual present in the state for more than nine months of the tax year is presumed to be a resident. That presumption can be rebutted with evidence that the stay was temporary, and the facts that count often include voter registration, driver’s license, where family lives, and where you file federal returns.

The tax base depends on residency status:

• Residents report all income from all sources, in Arizona or elsewhere, and may claim a credit for taxes paid to other states to limit double taxation.
• Nonresidents report only Arizona-source income, such as wages for work performed in Arizona or rent from Arizona property, typically on Form 140NR.
• Part-year residents report all income received while an Arizona resident, plus Arizona-source income received during the nonresident part of the year.

When is the Arizona income tax return due?

The Arizona individual income tax return for tax year 2026 is due April 15, 2027, matching the federal deadline. A valid extension moves the filing deadline to October 15, 2027, but an extension to file is not an extension to pay: any tax owed is still due by April 15, 2027, and interest and penalties can accrue on amounts paid late.

Arizona generally honors a federal extension, so many filers who submit federal Form 4868 do not need a separate state extension form, though the state provides Form 204 when one is needed. Taxpayers with income not subject to withholding, such as self-employment or investment income, may owe Arizona estimated payments during the year in the same way they make federal estimated tax payments.

How Arizona compares to other states

Arizona’s 2.5% flat rate sits at the low end of states that tax wage income at all. Several states, including Texas, Florida, and Nevada, impose no personal income tax, so a direct rate comparison only goes so far. Among states with an income tax, Arizona currently has the lowest single flat rate.

A high earner’s choice between Arizona and a graduated-rate state can hinge on where the graduated brackets top out. California, for example, applies rising rates that reach well into the double digits on high incomes, a very different profile from Arizona’s single 2.5%. Compare the California state income tax brackets or review the list of states with no income tax to see where Arizona falls, and see our overview of how state and federal income tax differ for the structural picture.

FAQ

What is Arizona’s income tax rate in 2026?

Arizona applies a flat 2.5% income tax to all taxable income for 2026, regardless of filing status or income level. It is the lowest flat income tax rate among U.S. states that tax wage income. There are no graduated brackets and no additional surcharge on higher earners, so the marginal and effective rates on taxable income are the same.

Does Arizona tax Social Security or retirement income?

Arizona does not tax Social Security benefits, and it excludes them from the income used to test filing requirements. Certain military and some government pensions receive partial exclusions. Most other retirement income, such as distributions from a 401(k) or traditional IRA, is generally taxable at the flat 2.5% rate. Rules can change, so confirm current exclusions before relying on them.

Is Arizona’s standard deduction the same as the federal one?

Yes. Arizona ties its standard deduction to the federal standard deduction under IRC Section 63, so the 2026 amounts are $16,100 for single and married filing separately, $24,150 for head of household, and $32,200 for married filing jointly. Because the figures track federal inflation adjustments, they change each year in step with the federal amounts.

Do Arizona cities charge a local income tax?

No Arizona city or county levies a personal income tax, so the flat 2.5% state rate is the only income tax on wages. Arizona does impose a transaction privilege (sales) tax and county property taxes, but neither applies to personal income. This can make Arizona take-home pay higher than in states where local wage taxes stack on top of the state rate.

When is the Arizona tax filing deadline?

The Arizona return for tax year 2026 is due April 15, 2027, aligned with the federal deadline. A valid extension pushes the filing date to October 15, 2027, but tax owed is still due April 15, 2027. Arizona generally accepts a federal extension, so a separate state extension form is often unnecessary for individual filers.

How does Arizona tax nonresidents?

Nonresidents pay Arizona income tax only on Arizona-source income, such as wages for work physically performed in the state or income from Arizona property, usually reported on Form 140NR. Residents, by contrast, are taxed on all income from every source. Part-year residents split the two, reporting all income earned while resident plus Arizona-source income earned as a nonresident.

Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.