Overview of Arizona Taxes
Taxpayers in Arizona face below-average income tax rates and property tax rates, along with very low gas taxes. But the state’s sales tax is among the highest in the country. Retired? Use our Retirement Income Tax Calculator.
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Your Income Taxes Breakdown
| Tax Type | Marginal Tax Rate | Effective Tax Rate | 2019 Taxes* |
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* These are the taxes owed for the 2019 - 2020 filing season.
Your 2019 Federal Income Tax Comparison
- Your marginal federal income tax rate
- Your effective federal income tax rate
- Your federal income taxes
Total Estimated 2019 Tax BurdenIncome Tax $ Sales Tax $ Fuel Tax $ Property Tax$ Total Estimated Tax Burden $ Percent of income to taxes = % | $ |
- About This Answer
Our income tax calculator calculates your federal, state and local taxes based on several key inputs: your household income, location, filing status and number of personal exemptions. Also, we separately calculate the federal income taxes you will owe in the 2019 - 2020 filing season based on the Trump Tax Plan.
How Income Taxes Are Calculated
- First, we calculate your adjusted gross income (AGI) by taking your total household income and reducing it by certain items such as contributions to your 401(k).
- Next, from AGI we subtract exemptions and deductions (either itemized or standard) to get your taxable income. Exemptions can be claimed for each taxpayer as well as dependents such as one’s spouse or children.
- Based on your filing status, your taxable income is then applied to the the tax brackets to calculate your federal income taxes owed for the year.
- Your location will determine whether you owe local and / or state taxes.
- Last Updated: January 1, 2020
When Do We Update? - We regularly check for any updates to the latest tax rates and regulations.
Customer Service - If you would like to leave any feedback, feel free to email info@smartasset.com.
- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Taxes in Arizona
Arizona State Tax Quick Facts
- Income tax: 2.59% - 4.50%
- Sales tax: 5.60% - 11.20%
- Property tax: 0.72% average effective rate
- Gas tax: 19 cents per gallon of regular gasoline, 27 cents per gallon of diesel (19 cents for light or exempt vehicles)
Arizona has been one of the fastest growing states in recent years, as low taxes may have played a role in drawing people to the desert. Among U.S. states, Arizona has below-average income and property tax rates, and it has the fourth lowest gas tax rate in the nation. On the other hand, when considering both statewide and local taxes, the Grand Canyon State has the 11th highest sales tax rate in the country. In all, the effect of Arizona’s tax system varies depending on your specific financial circumstances.
A financial advisor in Arizona can help you understand how taxes fit into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, homeownership, insurance and more, to make sure you are preparing for the future.
Arizona Income Taxes
Like the federal income tax, Arizona’s state income tax has rates based on income brackets. The rates range from 2.59% to 4.50%, with higher brackets paying higher rates.
Those rates apply to Arizona taxable income. The starting point for computing Arizona taxable income is federal adjusted gross income (AGI). From here, there are a number of subtractions and additions made to calculate taxable income. For example, interest income from non-Arizona municipal bonds is taxable, and must be added to taxable income.
For the most part, however, calculating taxable income is a matter of subtracting deductions and exemptions from gross income. Itemized deductions in Arizona track very closely to federal itemized deductions. If you choose not to itemize on your Arizona tax return, you can claim the Arizona standard deduction, which is $12,200 for single filers, $24,400 for joint filers and $18,350 for heads of household. Each of these match the federal standard deduction.
Arizona Sales Tax
You’ll have to pay state and local sales taxes on purchases made in Arizona. The statewide rate is 5.60%. When taking all local taxes into account, the state’s average rate is 8.37%, 11th highest in the nation. The table below shows the combined state and county taxes for every county and the combined state, county and city sales tax rates for the largest cities in Arizona.
While most products purchased in the state will be subject to those rates, some items are exempt. Among the items exempt from sales tax in Arizona are groceries, internet subscriptions, prescription drugs and professional or personal services.
Arizona Property Tax
The typical homeowner pays $1,398 per year in property taxes in Arizona, the 16th lowest amount nationally. Likewise, the average effective property tax rate (total taxes paid as a percentage of home value) is 13th lowest in the U.S, at 0.72%. That rate varies somewhat between cities and counties, but no county in Arizona has an effective property tax rate higher than 1.09%, which is just 0.01% above the U.S. average of 1.08%.
Arizona’s sales tax may be on the higher side, but its property taxes are among the lowest in the nation. If you’re looking to refinance or relocate to Arizona, take a look at our guide to Arizona mortgage rates and getting a mortgage in the state.
Arizona Tobacco Tax
On a nationwide scale, Arizona taxes cigarettes at a high rate. In fact, the tax costs $2.00 per pack of 20 cigarettes, or 10 cents per stick.
Arizona Estate Tax
As of January 2005, there is no estate tax in Arizona.
Arizona Alcohol Tax
Arizona collects excise taxes on alcoholic beverages, depending on the type of product being sold. The tax is equal to $3.00 per gallon of liquor, 84 cents per gallon of wine and 16 cents per gallon of beer.
- The Grand Canyon is over one mile deep in places, and as many as 18 miles wide. It may be over 17 million years old.
- Arizona was the last of the contiguous 48 states to achieve statehood. It did so on February 14, 1912.
Places with the Lowest Tax Burden
Are you curious how your tax burden stacks up against others in your state? SmartAsset’s interactive map highlights the counties with the lowest tax burden. Scroll over any county in the state to learn about taxes in that specific area.
Methodology
Where you live can have a big impact on both which types of taxes you have to pay each year and how much money you spend on them. SmartAsset calculated the amount of money a specific person would pay in income, sales, property and fuel taxes in each county in the country and ranked the lowest to highest tax burden.
To better compare income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes.
In order to determine sales tax burden we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a county by the household income less income tax. This product is then multiplied by 35% to estimate the sales tax paid.
For property taxes, we compared the median property taxes paid in each county.
For fuel taxes, we first distributed statewide vehicle miles traveled down to the county level using the number of vehicles in each county. We then calculated the total number of licensed drivers within each county. The countywide miles were then distributed amongst the licensed drivers in the county, which gave us the miles driven per licensed driver. Using the nationwide average fuel economy, we calculated the average gallons of gas used per driver in each county and multiplied that by the fuel tax.
We then added the dollar amount for income, sales, property and fuel taxes to calculate a total tax burden. Finally, we created the Tax Burden Index in order to show how each county in the country compares to the county with the lowest tax burden (that is the county with a Tax Burden Index of 100).
Sources: US Census Bureau 2017 American Community Survey, Government Sources, Avalara, American Petroleum Institute, GasBuddy, UMTRI, Federal Highway Administration, SmartAsset
