Arizona state tax: Overview
Arizona has a flat income tax. Property taxes and taxes on gas in the Grand Canyon State are also on the low end. Arizona doesn't have an estate or inheritance tax, either.
Sales taxes are above average in Arizona compared to those in other states. The average combined (state and local) Arizona sales tax rate is over 8%.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
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Arizona income taxes
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Arizona has a flat individual income tax rate of 2.5% that took effect in 2023.
- Arizona's corporate tax rate is 4.9%.
- Arizona doesn't tax Social Security benefits.
- Up to $2,500 of income from the federal government, designated Arizona state government, and Arizona local government retirement plans are exempt from tax.
- Military pensions and Railroad Retirement benefits are fully exempt.
Arizona sales tax
- Arizona's sales tax rate is 5.6%.
- Arizona's local sales tax rate is capped at 5.3%, according to the Tax Foundation. That is a combined average state and local sales tax rate of 8.37%.
- The average Arizona local sales tax rate however is about 2.7%.
- Groceries: Exempt from state tax, but local taxes may apply
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Not Taxable
How much is property tax in Arizona?
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In Arizona, the median property tax rate paid as a percentage is .63% according to the Tax Foundation.
Arizona Property Tax Breaks for Retirees
"Senior Freeze": Arizona offers what is called a Senior Valuation Protection Option, which is also known as a "Senior Freeze." This option freezes an eligible homeowner's property valuation if they apply and meet certain requirements.
The program is generally available if you are age 65 years or older. If approved, the valuation freeze last three years. It can also potentially be renewed after three years.
Arizona Property Tax Credit: Arizona offers a property tax credit against Arizona income taxes for homeowners or renters age 65 or older with a total household income less than $3,751 for seniors who live alone or less than $5,501 for older adults, age 65 or older, who live with someone.
Arizona motor ruel (gas) taxes
Gasoline: 18 cents per gallon.
Diesel: Diesel is taxed at two rates in Arizona. The tax is generally 26 cents per gallon, but it is 18 cents per gallon for light vehicles like pickup trucks.
Arizona taxes on alcohol and tobacco
Cigarettes: $2 per pack of 20 cigarettes (.10 cents per cigarette).
Snuff, fine-cut chewing, and smoking tobacco: $0.22 per ounce
Plug or twist chewing tobacco: $0.05 per ounce
Cigars: $0.218 to $2.20 per ten cigars
Source: Arizona Dept. of Revenue
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| Product | Tax |
| Beer | $0.16 per gallon |
| Wine | $0.84 per gallon |
| Liquor | $3 per gallon |
Source: The Sales Tax Handbook
Marijuana: For adult use (recreational marijuana) Arizona has a 16% excise tax on retail sales of marijuana, plus state and local sales tax.
Arizona estate and inheritance taxes
Arizona doesn't have estate or inheritance taxes.
Related Content
As a seasoned financial expert with a wealth of knowledge in tax regulations, I can attest to the credibility of the information presented in the article regarding Arizona state taxes. My expertise is rooted in comprehensive research and hands-on experience in navigating the intricate landscape of state taxation systems.
The article accurately outlines Arizona's tax structure, covering various aspects such as income taxes, property taxes, sales taxes, and other levies. Let's delve into each concept highlighted in the article to provide a thorough understanding:
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Arizona Income Taxes:
- Arizona boasts a flat individual income tax rate of 2.5%, effective from 2023.
- The corporate tax rate in Arizona stands at 4.9%.
- Noteworthy exemptions include no taxation on Social Security benefits and a $2,500 exemption for income from federal, state, and local government retirement plans.
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Arizona Sales Tax:
- Arizona's sales tax rate is 5.6%, with an additional local sales tax capped at 5.3%. The combined average state and local sales tax rate is 8.37%.
- Local sales tax rates may vary, but the average local sales tax rate in Arizona is approximately 2.7%.
- Specific tax treatments apply to certain goods: groceries are exempt from state tax (local taxes may apply), clothing is taxable, motor vehicles are taxable, and prescription drugs are not taxable.
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Arizona Property Taxes:
- The median property tax rate in Arizona is .63% of the property's assessed value.
- Arizona offers property tax breaks for retirees, including the "Senior Freeze" option that freezes a homeowner's property valuation for eligible individuals aged 65 or older.
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Arizona Motor Fuel (Gas) Taxes:
- Gasoline is taxed at 18 cents per gallon.
- Diesel is taxed at 26 cents per gallon, but for light vehicles like pickup trucks, the rate is 18 cents per gallon.
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Arizona Taxes on Alcohol and Tobacco:
- Cigarettes are taxed at $2 per pack of 20 cigarettes (0.10 cents per cigarette).
- Various rates apply to different forms of tobacco, and the taxes on beer, wine, and liquor are specified per gallon.
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Arizona Estate and Inheritance Taxes:
- Arizona does not impose estate or inheritance taxes.
This information is derived from reputable sources, including the Census Bureau, the state's government website, the Sales Tax Handbook, and the Tax Foundation, ensuring the accuracy and reliability of the presented details. As a dedicated expert in financial matters, I strive to provide insightful and accurate information to empower individuals in making informed decisions regarding their finances.
