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Arizona Income Tax Withholding and Payroll Information

Compliance with state taxes are required for every employer. Learn about relevant rates and automation below.

A team using ez1095 software for small businesses

Every state in the country has a unique paradigm for income tax and state unemployment insurance rates. Located below are relevant rates and complance information by state.

Employers must also adhere to federal income tax withholding rules as well. More information can be found here about federal rates .

Alternatively, employers can automatically calculate payroll witholding information by using ezPaycheck.

Arizona Tax Information

General Information
State Abbreviation AZ
State Tax Withholding State Code 04
Acceptable Exemption Form A-4
Basis For Withholding State Exemptions
Acceptable Exemption Data 0.5, 1.0, 1.5, 2.0, 2.5, 3.0, 3.5
TSP Deferred Yes
Special Coding
Additional Information None

How to Calculate Arizona Taxes

Arizona state tax is based on a percentage of the Arizona State taxable wages .

Determining the Total Number of Allowances

When a Form A-4 has not been filed, or an invalid status is found for an employee on the database, the employee's taxes will automatically be withheld at the higher rate of 2.7% , regardless of annual income. To elect a percentage lower or higher than 2.7% , employees must submit a Form A-4 .

The employee can submit a Form A-4 for a minimum withholding of 1.3% of the amount withheld for state income tax if the annual wages are less than $15,000, or 1.8% of the amount withheld for state income tax if the annual wages are $15,000 or more.

An employee required to have 1.3% deducted may elect to increase this rate to 1.8%, 2.7%, 3.6%, 4.2%, or 5.1% by submitting a Form A-4 . Similarly, an employee required to have 1.8% deducted may choose to increase this rate to 2.7%, 3.6%, 4.2%, or 5.1% by submitting a Form A-4 .

Conversion of Rates

The old rates will convert to the new Arizona state rates. Employees with an exempt status will remain the same.

Important Note

Note: Do not enter the decimal point when entering the percentage in the Total Number Of Allowances Claimed field. For example, to enter 1.3% , type 013 .

Exemption Eligibility

If Block 3 is checked on Form A-4 , enter 0NL . No tax will be withheld due to total exemption eligibility.

Want to calculate in a easier way? Learn how to calculate Arizona taxes via ezPaycheck below.

Learn More

Automate Payroll with ezPaycheck

ezPaycheck is an easy-to-use payroll software designed with small businesses in mind: simple, reliable, and affordable. Our developers designed it to be a in house payroll tax solution for small businesses to calculate taxes, print paychecks for employees & contractors, generate reports and print tax forms. No internet connection is needed.

Try it free for 30 days with no obligation and no credit card needed. ezPaycheck is available for both Windows and Mac computers.