Arizona taxes personal income at a flat 2.5%, charges a transaction privilege tax that starts at 5.6% and climbs with county and city add-ons, leaves property tax to the counties, and imposes no estate or inheritance tax. Corporations pay a flat 4.9%. Individual returns are due April 15. The sections below walk through each Arizona tax, what you’ll actually owe, and the deadlines that matter.
Individual Income Tax Rate
Arizona applies a single flat rate of 2.5% to all taxable income, no matter how much you earn or how you file.1Arizona Department of Revenue. Individual Income Tax Highlights There are no brackets and no high-earner surcharge.
Who pays depends on residency. Full-year residents owe tax on income from every source. Part-year residents are taxed only on income earned during the months they lived in Arizona. Nonresidents file an Arizona return only if they earned Arizona-source income, such as wages from an Arizona employer or rent from Arizona property.2Arizona Department of Revenue. Individual Income Tax Information Residency itself turns on where your permanent home is and whether you intend to keep it there; a temporary absence for work or travel doesn’t break residency.
Standard Deduction
Before the 2.5% rate applies, you reduce gross income with a standard deduction. For 2025:
- Single or married filing separately: $15,750
- Married filing jointly: $31,500
- Head of household: $23,625
These are set by the Arizona Department of Revenue and adjusted periodically.1Arizona Department of Revenue. Individual Income Tax Highlights Arizona also lets you itemize on your state return even if you took the standard deduction federally, which can help if your state-deductible expenses are significant but didn’t clear the federal threshold.
Credits That Reduce What You Owe
The dependent tax credit is worth $100 per dependent under 17 and $25 per dependent 17 or older. It phases out at federal AGI above $200,000 (single) or $400,000 (joint), shrinking 5% for every $1,000 over.3Arizona Legislature. Arizona Code 43-1073.01 – Dependent Tax Credit
Donations to qualifying charitable organizations and qualifying foster care charitable organizations generate dollar-for-dollar credits. For 2026, the QCO cap is $506 single / $1,009 joint, and the QFCO cap is $632 single / $1,262 joint. Contributions made between January 1 and April 15 can be claimed on either that year’s return or the prior year’s.4Arizona Department of Revenue. Credits for Contributions to QCOs and QFCOs
Military Pay
Arizona fully exempts military retired pay and survivor benefit annuities from state income tax. Active duty and reserve pay are also excluded.5Arizona Legislature. Arizona Code 43-1022 – Subtractions From Arizona Gross Income
Transaction Privilege (Sales) Tax
What Arizonans experience as sales tax is legally the transaction privilege tax, or TPT. It’s assessed on the business for the privilege of operating in the state, but businesses pass it through to buyers, so it shows up on receipts like a sales tax.
The state retail rate is 5.6%. Counties and cities add their own layers, so the combined rate depends on where the sale happens.6Arizona Department of Revenue. Transaction Privilege Tax In most cities the combined rate falls between 7% and 10%, and some locations exceed 11%.7Arizona Department of Revenue. Arizona State, County and City Transaction Privilege and Other Tax Rate Tables
Groceries purchased for home consumption are not subject to state TPT, though prepared restaurant food is taxable. Other exemptions include prescription drugs, medical oxygen, prosthetic devices, insulin and glucose test strips, durable medical equipment, hearing aids, prescription eyeglasses and contact lenses, and textbooks required by a state university or community college.8Arizona Legislature. Arizona Code 42-5061 – Retail Classification
Use Tax on Online and Out-of-State Purchases
If you buy from an out-of-state seller who doesn’t charge Arizona TPT, you owe use tax at the 5.6% state rate plus applicable local rates, remitted directly to the Arizona Department of Revenue. Casual sales between individuals, prescription medicines, and most groceries are exempt from use tax just as they are from TPT.9Arizona Department of Revenue. Understanding Use Tax
Property Tax
Property tax is administered by county assessors, not the state. Every parcel gets two values. Full Cash Value (FCV) reflects market value. Limited Property Value (LPV) is the number used to calculate your primary tax bill, and it can rise no more than 5% a year and can never exceed FCV.10Arizona Department of Revenue. Limited Property Value
The county then applies an assessment ratio to the LPV. For owner-occupied homes (Class 3), the ratio is 10%, so a $300,000 LPV produces a $30,000 assessed value, and the tax rate is applied to that figure.11Arizona Department of Revenue. Arizona Property Taxation
Payments come in two installments. The first half is due October 1 and becomes delinquent after November 1 at 5:00 p.m. The second half is due March 1 of the following year and becomes delinquent after May 1 at 5:00 p.m.12Arizona Legislature. Arizona Code 42-18052 – Due Dates and Times; Delinquency
Relief for Seniors, Widows, and Disabled Residents
Widows, widowers, and people with a total and permanent disability can claim an exemption of $4,188 off assessed value, provided the property’s total assessment doesn’t exceed $28,459. Household income from the prior year must be under $34,901, or $41,870 if a child under 18 lives with you. Social Security, workers’ compensation, and veterans’ pensions don’t count toward the income limit. All figures adjust annually for inflation. You claim it by filing an affidavit with the county assessor.13Arizona Legislature. Arizona Code 42-11111 – Exemption for Property; Widows and Widowers; Persons With a Total and Permanent Disability; Veterans With a Disability
Homeowners 65 and older who have lived in the home at least two years and meet income limits can also apply to freeze their assessed value under the Senior Property Valuation Protection Option. The application goes to the county assessor by September 1.14Arizona Department of Revenue. Senior Property Valuation Protection Option
Vehicle License Tax
Arizona doesn’t charge a traditional personal property tax on vehicles. In its place is the Vehicle License Tax (VLT), paid each year at registration renewal. The assessed value is 60% of the manufacturer’s base retail price in year one, then drops 16.25% each year after. The rate is $2.80 per $100 of assessed value in the first registration year and $2.89 per $100 every year after.15Arizona Joint Legislative Budget Committee. Vehicle License Tax A new car with a $35,000 base price would carry a first-year VLT of roughly $588, declining each year with the assessed value.
Corporate Income Tax
C corporations pay a flat 4.9% on Arizona taxable income, with a $50 minimum regardless of profitability.16Arizona Legislature. Arizona Code 43-1111 – Tax Rates for Corporations S corporations and partnerships generally pass income through to owners’ individual returns.
No Estate or Inheritance Tax
Arizona imposes no estate tax and no inheritance tax. Heirs receive assets without any state-level tax on the transfer. Federal estate tax may still apply to estates above the federal exemption, but Arizona adds nothing on top.
Filing Deadlines and Penalties
Individual income tax returns are due April 15, matching the federal deadline. An automatic extension moves the filing deadline to October 15, but any tax owed is still due April 15, and interest runs on unpaid balances from that date.17Arizona Department of Revenue. Extension Deadline Approaching for Arizona Individual Income Tax Filers Electronic filing through AZTaxes.gov or commercial software is the fastest option.
Quarterly estimated payments are required if your Arizona gross income exceeds $75,000 ($150,000 joint) in both the current and prior tax year. Installments are due April 15, June 15, September 15, and January 15, matching the federal schedule. To avoid an underpayment penalty, payments must cover at least 90% of the current year’s tax or 100% of the prior year’s.18Arizona Legislature. Arizona Code 43-581 – Payment of Estimated Tax; Rules; Penalty; Forms
File late and Arizona charges 4.5% of the unpaid tax for each month or partial month the return is overdue.19Arizona Department of Revenue. Filing Notices of Penalties and Interest That penalty stacks fast. If you can’t pay the full balance, file on time with a partial payment anyway. The interest on an unpaid balance is far less than the late-filing penalty.