At 2.5%, Arizona has the lowest income tax rate of any state that taxes wages broadly — less than a quarter of what a California resident pays at the same salary.
| Gross pay | — |
| Federal income tax | — |
| Social Security6.2% up to $184,500 | — |
| Medicare1.45%, no cap | — |
| State income tax | — |
| 401(k) contribution | — |
| Health and HSA | — |
Useful if you are comparing a job that pays monthly against one that pays every two weeks, or working out what a raise is worth per paycheck.
| Pay schedule | Gross | Take-home |
|---|
Arizona compressed a graduated system that topped out at 4.5% into a single 2.5% rate. Among the fifteen flat-tax states, none is lower, and only North Dakota's graduated top rate matches it.
The comparison that matters for most people moving to Arizona is California, where a single filer is in a 9.3% bracket from about $72,724 of taxable income. At $100,000 the difference between the two states runs to several thousand dollars a year in state income tax alone.
Arizona's standard deduction is $8,350 for a single filer and $16,700 for a couple. Those figures look odd next to the federal $16,100 and $32,200, and there is a specific reason: Arizona conforms to a version of the federal tax code that predates the One Big Beautiful Bill Act, so it is currently tied to the older, lower standard deduction adjusted for inflation.
States in this position often pass legislation updating their conformity date retroactively. If Arizona does so, the deduction rises and your bill falls. Worth checking before filing rather than assuming the figure is settled.
Arizona also allows the standard deduction to be increased by a percentage of what you would have claimed in charitable deductions had you itemised — an unusual provision that lets you get some charitable benefit without giving up the standard deduction.
Rather than a dependent exemption subtracted from income, Arizona gives a credit against tax owed: $100 per dependent under 17 and $25 for dependents 17 and older. It phases out above $200,000 of federal adjusted gross income for single filers and $400,000 for joint filers.
At a 2.5% rate a credit is worth considerably more than an equivalent exemption would be. A $100 credit is the equivalent of a $4,000 deduction, which is more than most states offer per dependent.
No Arizona city or county levies an income tax, including Phoenix and Tucson. The state figure is the whole picture. Arizona's revenue leans instead on a transaction privilege tax, which functions like a sales tax and pushes combined rates above 8% in parts of the Phoenix metro.
Yes for state purposes, and no city or county adds to it. Arizona's transaction privilege tax on purchases is where the state recovers a good deal of revenue.
Arizona currently conforms to a pre-OBBBA version of the federal code, which carries a lower standard deduction. The state may update its conformity date retroactively, which would raise it.
$100 per dependent under 17, $25 for those 17 and older, phasing out above $200,000 single or $400,000 joint.
Substantially cheaper. Arizona taxes it at 2.5% after deductions; California applies graduated rates reaching 9.3% on income above roughly $72,724.