Filing Arizona State Taxes

The state of Arizona collects income taxes from its residents in five brackets. Between 2004 and 2008, tax brackets across the board were reduced. The top rate in Arizona during 2008 is 4.54%, while the lowest rate is 2.59%.

Tax Planning

Personal Income Tax

Rates for single and married taxpayers (filing separately) are :

• You need to pay 2.59% on the first $10,000 of taxable income.
• You need to pay 2.88% on taxable income between $10,001 and $25,000.
• You need to pay 3.36% on taxable income between $25,001 and $50,000.
• You need to pay 4.24% on taxable income between $50,001 and $150,000.
• You need to pay 4.54% on taxable income above $150,000.

The income tax forms in the state of Arizona are due April 15. If the date falls on a holiday or weekend, you need to file tax return next business day. It is mandatory for residents of Arizona to add a few items to Arizona gross income. These include interest income from non-Arizona municipal bonds. For capital gains, there is no special treatment in Arizona. Capital gains that are there in your federal adjusted gross income are taxed at conventional tax rate.

Sales Tax

You will be charged a rate of 6.3% according to Arizona Transaction Privilege Tax, widely regarded as sales tax. Arizona does not levy a state tax on prescription drugs. All 15 counties in Arizona levy a tax. Incorporated municipalities in the state of Arizona also levy sales tax. Hotel/motel tax in Arizona is in the range of 1% to 3%.

Personal and Real Estate Property Tax

Tax rates in the state of Arizona are set based on the complete assessed valuation within certain boundaries. There is a slight variation in tax rates from one area to another. It is the responsibility of local assessors to value the owner-occupied residential properties. Local assessors accomplish this task through replacement cost new, less depreciation method and sales analysis method. Personal property is also taxed in Arizona. All kinds of property come under the category of personal property except real estate. Taxable personal property consists of commercial property and property used for agricultural purposes. Personal property is not permanently linked to real estate. As a matter of fact, personal property is movable.

Inheritance and Estate Tax

There is no estate tax on individuals who died after 2004. Furthermore, no gift or inheritance taxes are imposed on the residents of Arizona.

Other Tax Information :

• Intangible personal property tax is not levied in the state of Arizona.
• There is a new credit for Arizona taxpayers who have installed solar energy devices for industrial purposes.
• Retirement income from other states is taxed in Arizona.