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Business & FinanceArizona, USA

Arizona Flat Income Tax Law

Summary

Arizona officially transitioned its state income tax system from a progressive, multi-bracket system to a single, low 'flat tax' rate for almost all residents.

Rights & Rules

  • 01.
    As of 2024, the state income tax rate in Arizona is a flat 2.5%, regardless of how much money you make.
  • 02.
    Whether you make $40,000 a year or $4,000,000 a year, your state income tax bracket is exactly the same (2.5%).
  • 03.
    This law effectively eliminated a voter-approved surcharge on high earners (Prop 208) that was meant to fund public education.

Penalties

  • 01.
    Standard state tax evasion penalties apply for failing to file or pay the 2.5% tax.

Verified Citations

Arizona Senate Bill 1828 (2021) / ARS 43-1011

Source
"There shall be levied, collected and paid for each taxable year upon the entire taxable income... a single tax rate of 2.5 percent."