Does Arizona Have State Income Tax?Pat Fontana
The tax filing deadline is quickly approaching. Understanding who needs to file and how to file can mean the difference in the accuracy of your paperwork and in the amount you may need to pay or may receive in a refund. State income taxes do not receive as much notice as federal taxes, but most states do have their own income tax. Does Arizona have state income tax? The short answer is yes, but there are different levels depending on your situation.
State Income Taxes
Some states have no income taxes, some have a flat rate, and others have a progressive rate. Only eight states have none: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. Most states have tax rates that follow the lead of the federal tax system. They are progressive rates that depend on your family situation and your income. Arizona is one of those states.
Arizona Individual Requirements
The extended tax filing deadline is May 17, 2021, for the state of Arizona as well as for the Internal Revenue Service. However, the deadline for first quarter individual estimated tax payments was not extended from April 15.
An individual who is a full-year or part-time resident must file a tax return if they meet the following minimum income levels:
- Single or married filing separately and gross income (GI) is greater than $12,400;
- Head of household and GI is greater than $18,650; or
- Married and filing jointly and GI is greater than $24,800.
The starting point for Arizona’s individual income tax return is the federal Adjusted Gross Income (AGI).
For individuals who need more time to file their returns, an extension may be available. Those individuals should file Form 204 prior to the deadline of May 17. An extension, however, does not grant more time to pay any taxes that may be owed.
Progressive Income Tax
Arizona is one of the many states that has a progressive tax rate for individuals. The rate is based on the individual’s income and family situation and is divided into four brackets. An Arizona resident may also need to pay property taxes and a vehicle license tax as well as a transaction privilege tax, also known as the state sales tax.
The rates for 2020 fall within the following brackets:
- 2.59% – Single with an income of $0-$26,500; married with an income of $0-$53,000
- 3.34% – Single with an income of $26,501-$53,000; married with an income of $53,001-$106,000
- 4.17% – Single with an income of $53,001-$159,000; married with an income of $106,001-$318,000
- 4.50% – Single with an income of $159,001 and over; married with an income of $318,001 and over.
Filing Business Taxes in Arizona
Business owners can enroll and file taxes online in Arizona. First, they will need to register for an AZTaxes account to be able to use the state’s business services. The process involves enrolling an email address on the site to create an account to be able to file and pay online. There are two types of AZTaxes users for filing business taxes online:
The Primary User maintains the entire account and then provides access to other users as delegated. There is only one Primary User per business account, which should probably be an officer or owner of the business, according to the Arizona Department of Revenue.
The Delegate User is assigned specific authority for certain account functions for the business, by the Primary User. The Delegate User can be an office manager, a CPA, a paid tax preparer, or an additional officer or owner of the business.
CLEAR VIEW BUSINESS SOLUTIONS CAN HELP
The tax filing deadline is looming but there is still time to prepare and submit individual and business taxes for the state of Arizona and for the Internal Revenue Service. We realize that taxes can be confusing, but we are here to help.
The experts at Clear View know what you need to do and when you need to do it. We can help ensure that you are maximizing your available credits and deductions and minimizing your tax payment. We work with you at tax time and throughout the year to help you be better prepared to make sound financial decisions and to plan for your success. Learn more about how we can help you and your business by contacting Clear View Business Solutions to speak to our team about our services. Give us a call at (520) 544-0177.