Arizona State Income Tax in 2025: A Guide

Arizona’s state income tax rate is one of the simplest in the country for individuals with a flat rate of 2.5%. This fixed rate began in the 2023 tax year and replaces the state’s former tax bracket system. This means that all individual taxpayers—no matter how much money they make—pay the same state tax percentage. 

If you live in Arizona or earn income in The Grand Canyon State, filing taxes this year is more predictable than in states with a tax bracket system. For example, California has several tax rates for income earners, with some reaching double digits for top earners. In Arizona, you don’t have to worry about any of that.

Let’s take a look at what you can expect when filing taxes in Arizona for the 2024 tax season (the taxes you’ll file in 2025). 

*Note that you are still responsible for Federal taxes if you meet the IRS income filing threshold. This article addresses state-specific taxes only.

Who has to file Arizona state income tax?

Anyone who makes money in Arizona may need to file a state income tax return. It all depends on things like your adjusted gross income (AGI), filing status, and residency status. 

Gross income, which includes all the money you earn before deductions—such as wages, tips, interest, and rental income—is the starting point for calculating your AGI. Arizona residents, part-year residents, and even nonresidents may need to file taxes if their AGI is above a certain threshold.

For the 2024 tax year, your AGI and tax filing status determines whether you meet the gross income limits for filing. Filers with a gross income above the fixed amount must submit an Arizona return. Nonresidents or part-year residents must also file if they exceed the income limit.

How Arizona residency impacts tax filing

Arizona has three residency statuses for tax purposes: 

• Resident
• Part-year resident
• Nonresident 

Your residency status determines how Arizona taxes money you earn. Whether you live in Arizona full-time or only earn income from the state, knowing your residency status is important for your taxes.

The following table explains each residency status, who qualifies, and how Arizona taxes income for each group:

Residency status	Definition	How Arizona taxes income
Resident	You lived in Arizona for the entire tax year, or Arizona is your permanent home.	Arizona taxes all income no matter where it is earned.
Part-year resident	You lived in Arizona for part of the tax year but established residency or moved in or out of state.	Arizona taxes income earned while you were a resident, as well as any Arizona-sourced income.
Nonresident	You lived outside Arizona during the tax year but earned income from Arizona sources.	Arizona only taxes income earned from Arizona sources.

Source: Arizona Department of Revenue

Other Arizona income tax rate considerations

Arizona residents may need to know how the state taxes different types of income outside money earned from standard wages and salaries from work. This could include money from retirement, investments, Social Security, or military pay. 

Let’s break down the rules for each of these categories and explore any available tax breaks:

• Retirement and pension income tax: Arizona applies its flat 2.5% income tax rate to most retirement income from sources like 401(k)s, 403(b)s, IRAs, and pension income. There are exemptions up to $2,500 for certain US government civil service pensions and Arizona state or local government pensions.
• Investment income tax: Investment income, including dividends and interest, is subject to the flat 2.5% Arizona state income tax. However, you are allowed to subtract 25% of your long-term capital gains income, which effectively reduces the long-term capital gains rate to 1.875%. 
• Social Security income tax: Arizona does not tax Social Security benefits.
• Military income tax: Arizona offers a full exemption for active-duty military pay and military retirement pay.
  

Common Arizona income tax credits and deductions

Arizona offers a handful of state-specific income tax deductions and credits that can help reduce your taxable income or provide a direct benefit when filing your return. 

Here are some important deductions and credits Arizona taxpayers should know about for tax year 2024 (the taxes you file in 2025):

Tax Deductions and Credits	Description	Amount
Standard Deduction	Deduction amount for individuals, married couples filing jointly, married taxpayers filing separately, and those filing as head of household.	$14,600 for individuals or married taxpayers filing separately, $21,900 for individuals filing a head of household return, and $29,200 for married filers filing jointly.
Itemized Deduction (for taxpayers that do not take the standard deduction)	Major deductions include medical and dental expenses, mortgage interest deduction, charitable contributions, and state income taxes.	Amount differs depending on specific deduction and what is allowable under Arizona tax code.
Charitable Contributions (Qualifying)	Credit for contributions to qualifying charitable organizations.	Up to $470 for singles, and $938 for married couples.
Charitable Contributions (Foster Care)	Credit for donations made to foster care charitable organizations.	Up to $587 for singles, and $1,173 for married couples.
Dependent Tax Credit (Exemption)	Credit for each dependent, reducing taxable income.	$100 per dependent under 17 and $25 each for all other dependents.
Private School Tuition Tax Credit	Credit for contributions to certified private school tuition organizations.	Up to $731 for singles, and $1,459 for married couples.
Public School Tax Credits	Credit for contributions to public schools for extracurricular activities.	Up to $200 for singles, and $400 for married couples.

Source: Arizona Department of Revenue

How to file state income tax in Arizona

Understanding your Arizona residency status, tax deductions, and tax credits can be complex—but you don’t have to manage filing your 2024 taxes alone. Whether you want to do your taxes yourself or get professional tax help, TurboTax offers expert guidance at every step, and you don’t need to know anything about tax laws and forms.

You can easily connect with a local TurboTax expert that will prepare your taxes for you from start to finish. TurboTax local tax pros know all the ins and outs of Arizona tax law, ensuring that your refund is the best it can be. Connect with a local TurboTax professional in Arizona anytime for expert tax advice. 

You can also prepare your taxes with TurboTax online—or we can prepare them for you. TurboTax helps ensure that you get every deduction and credit you qualify for in Arizona so you can keep more of your hard-earned money. Whether you’re a resident, nonresident, or part-year resident in the state, TurboTax makes filing your taxes easy. Get started today!