Arizona Form 309: Double-Taxed Income, Credit Computation, and Filing

Arizona Form 309 is the form Arizona residents use to claim a nonrefundable credit for net income taxes already paid to another state or country on the same income Arizona is taxing. The credit equals the lesser of two numbers: the Arizona tax attributable to the double-taxed income, or the net tax the other jurisdiction charged on that same income. You complete a separate Form 309 for each state or country, attach it along with Form 301 to your Arizona return, and the credit reduces your Arizona liability dollar for dollar.¹

Confirm You Can Use the Form

Under A.R.S. § 43-1071, the credit is available when income on your Arizona return was also subject to a net income tax in another state or country, and the income came from sources in that other jurisdiction. Wages withheld by another state without a return actually filed there do not qualify on their own.¹

Full-year residents attach Form 309 to Form 140. Part-year residents use Form 140PY and can only claim the credit for income earned while they were Arizona residents. Nonresidents file Form 140NR and rarely need Form 309, unless their home state provides no credit for Arizona tax.²

States That Do Not Qualify

The statute blocks the credit if the other state already gives Arizona residents a credit against its tax for the Arizona tax they paid.³ For the 2025 tax year, nonresident returns filed with the following states do not qualify for a Form 309 credit on your Arizona return: Alaska, California, Florida, Indiana, Nevada, New Hampshire, Oregon, South Dakota, Tennessee, Texas, Virginia, Washington, and Wyoming.¹

Several of those states have no income tax, so there is nothing to credit. For California, Indiana, Oregon, and Virginia, you claim relief on that state’s nonresident return instead. Employers of nonresidents from those four states are also exempt from Arizona withholding under A.R.S. § 43-1096.⁴

What to Have Ready

Before you start filling out the form, pull together:

The filed return from the other state or country, showing the income reported and the net tax paid after that jurisdiction’s own credits. Estimated numbers will not do.
Your Arizona return in progress, so you can see your Arizona adjusted gross income and your Arizona tax liability before credits.
Arizona Form 301, Nonrefundable Individual Tax Credits and Recapture, which every Form 309 filer must also complete. Form 301 totals your nonrefundable credits and carries them to your main return.⁵
A separate Form 309 for each state or country. Two states means two forms.⁶

You do not attach the other state’s return to your Arizona filing. The Department of Revenue can request it later, though, and if you cannot produce it the credit will be disallowed until you do.⁶

Part 1: Identify the Double-Taxed Income

Lines 1 through 5 list the income items taxed by both jurisdictions. Think wages from an out-of-state job, partnership income sourced to another state, or rental income from property located there. For each item, enter the amount included in your Arizona adjusted gross income on line 3 and the amount included in the other state’s equivalent on line 4. Line 5 takes the smaller of those two figures.¹

The form provides up to three income columns. Line 6 adds the line 5 amounts across those columns, giving you the total income subject to tax in both Arizona and the other jurisdiction. That total feeds into Part 2.¹

Part 2: Compute the Credit

This is where the lesser-of math happens.

Line 7 is your Arizona tax liability after subtracting every other credit except the Form 309 credit. Arizona applies this credit last.¹

Line 8 carries over the total double-taxed income from line 6.

Line 9 is your entire Arizona income upon which tax is imposed. That is your Arizona adjusted gross income, excluding exemptions for age, blindness, dependents, and qualifying parents and grandparents.⁷

Line 10 divides line 8 by line 9, producing a ratio capped at 1.0. That ratio is the share of your Arizona income that was also taxed elsewhere.

Line 11 multiplies the line 7 Arizona tax by the line 10 ratio. The result is the Arizona tax attributable to the double-taxed income.

Line 12 is the net income tax you actually paid to the other state or country on that same income.

Line 13 is your credit: the smaller of line 11 or line 12.¹

Arizona’s individual income tax runs at a flat 2.5%, so when the other state’s rate is higher, line 11 is often the binding figure. The portion of the other state’s tax that exceeds what Arizona would have charged on the same income does not get credited.

Attach It to Your Return

File Form 309 and Form 301 with your Arizona return (Form 140, 140PY, or 140NR). The line 13 amount from Form 309 flows onto Form 301, which totals your nonrefundable credits and feeds that figure into the credit line on your main return.⁶ E-file software handles the sequence automatically. For the 2025 tax year, the e-file deadline is midnight on April 15, 2026, with an automatic six-month extension available to October 15, 2026 (interest still runs on any unpaid tax from the April date).⁸

Rules That Catch People Off Guard

No carry-forward or carry-back. The credit is usable only in the year the income was taxed in both places. Any excess over your Arizona liability is lost.¹
Applied last. Every other available credit reduces your Arizona tax first, which can shrink what the Form 309 credit is calculated against.¹
No city or county taxes. Only state-level or country-level net income taxes qualify.¹
Same tax year on both sides. If timing differences push the other state’s tax into a different year, the income does not qualify.³
Later refunds trigger an amended return. If the other state or country later refunds or credits tax you based the Form 309 credit on, you must notify the Department of Revenue and amend your Arizona return.¹

Pass-Through and Foreign-Tax Variants

If you are a partner or S corporation shareholder and the entity elected to pay income tax at the entity level in another state, use Form 309-SBI instead, paired with Form 301-SBI. For 2025, 26 jurisdictions qualify for the PTE credit; California, Oregon, and Virginia are among those that do not qualify for Arizona residents, though residents of those three states can claim the PTE credit on an Arizona nonresident return. The PTE credit cannot exceed what the credit would have been if the income had been taxed at the individual level.⁹

Form 309 also covers foreign country income taxes, provided the foreign taxes meet the standards of Internal Revenue Code Sections 901 and 903. You complete it even if you did not file federal Form 1116.⁶ Income excluded from your federal gross income under the Foreign Earned Income Exclusion generally will not qualify, because it will not appear in your Arizona adjusted gross income either.¹⁰

1
Arizona Department of Revenue. Arizona Form 309 Instructions 2025
2
Arizona Department of Revenue. Arizona Form 140 Instructions 2025
3
Arizona Legislature. Arizona Code 43-1071 – Credit for Income Taxes Paid to Other States Definitions
4
Arizona Department of Revenue. Withholding Exceptions
5
Arizona Department of Revenue. Nonrefundable Individual Tax Credits and Recapture
6
Arizona Department of Revenue. Arizona Form 309 – Credit for Taxes Paid to Another State or Country
7
Arizona Department of Revenue. Procedure for Calculating Credit for Taxes Paid to Another State ITP 08-1
8
Arizona Department of Revenue. E-File Services
9
Arizona Department of Revenue. Credit for Taxes Paid to Another State or Country Form 309-SBI
10
Arizona Department of Revenue. Procedure for Claiming Credit for Taxes Paid to Another Country ITP 20-01