Arizona switched to a flat 2.5% income tax in 2023, replacing its old graduated brackets. That makes the state tax simple to compute: subtract your deduction from income, then multiply the remainder by 2.5%. This calculator does exactly that, with the correct standard deduction for your filing status and the option to itemize instead.
How it works
Arizona’s flat tax means there are no brackets to step through:
- Start with gross income. Enter your total annual income.
- Subtract a deduction. Use Arizona’s standard deduction (matching the federal amount for your filing status), or enter your itemized deductions if they are larger.
- Apply the flat rate. Multiply the resulting taxable income by 2.5%.
The formula is: tax = max(0, income − deduction) × 0.025. Because the rate is flat, your marginal and average rates on taxable income are identical at 2.5%; your effective rate on gross income is lower because of the deduction.
Tips and example
A single filer with $80,000 of income and the standard deduction of $14,600 has $65,400 of taxable income, so Arizona tax is $65,400 × 2.5% = $1,635. That is an effective rate of about 2.0% on gross income — well below the federal burden on the same income.
Remember this models only the state income tax. Federal income tax, Social Security, and Medicare are separate and far larger. Arizona also offers credits — such as the dependent credit and charitable-contribution credits — that can reduce your actual liability below the figure shown here.