Arizona vs Federal Tax Comparison
| Tax Type | AZ State Rate | Federal Rate | Notes |
|---|---|---|---|
| Personal Income Tax | 2.5% flat | Federal: 10–37% | Combined fed+state applies |
| Corporate Income Tax | 4.9% | Federal: 21% | 4.9% flat rate (reduced 2023) |
| State Sales Tax | 5.6% | No federal sales tax | Combined avg: 8.37% |
| Capital Gains Tax | 2.5% | Federal: 0–20% | Same as income tax |
About Arizona Taxes
Flat 2.5% income tax — one of the lowest in the US.
Arizona levies income tax at rates from 2.5% flat. The flat rate structure means all taxpayers pay the same percentage, providing simplicity and predictability.
Corporate activity in Arizona faces a 4.9% state corporate tax rate. 4.9% flat rate (reduced 2023). Combined with the 21% federal corporate rate, businesses should plan accordingly.
Calculate Your Net Salary in Arizona
See federal + AZ state tax deductions, Social Security, Medicare, and take-home pay
Open US Salary CalculatorFrequently Asked Questions — Arizona Taxes
What is Arizona's state income tax rate?
Arizona uses a flat 2.5% income tax rate — meaning all taxable income is taxed at the same rate regardless of earnings level. This simplifies filing and is generally favorable for higher earners compared to progressive bracket states.
What is the corporate income tax rate in Arizona?
Arizona imposes a corporate income tax at 4.9%. 4.9% flat rate (reduced 2023). Businesses should also account for federal corporate tax at 21% on top of the state rate.
What is the sales tax rate in Arizona?
Arizona has a state sales tax of 5.6%. When local city and county taxes are included, the average combined rate reaches 8.37%. Rates vary by locality so check the specific municipality for accurate figures.
How does Arizona compare to neighboring states for taxes?
Arizona's overall tax burden ranks favorably among US states. The state levies income tax at up to 2.5%. For individuals evaluating relocation or remote work, comparing the full picture — income, sales, and property taxes — is essential. Use our US Salary Calculator to estimate your net income in Arizona.
Are there any special tax incentives or exemptions in Arizona?
Arizona offers notable tax characteristics: Flat 2.5% income tax — one of the lowest in the US. Businesses and individuals should consult a qualified tax advisor to understand eligibility for available credits, deductions, and incentives specific to Arizona.
Cost of Living in Arizona
Tax rates are only part of the picture — explore city-level cost of living data:
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