ARIZONA PAYCHECK CALCULATOR
Arizona charges a flat 2.5% state income tax, and that’s not just low, it’s the lowest flat rate of any state in the country that taxes income at all. Everyone pays the same percentage whether they make $35,000 or $3.5 million, which is a big part of why Arizona has pulled in so many people leaving higher-tax states like California in recent years.
A paycheck here gets trimmed by federal income tax, Social Security, Medicare, and that flat state rate, nothing more. There’s no city or county income tax anywhere in Arizona, and no employee-paid unemployment or disability tax either, so what you see on a pay stub is about as simple as it gets. Curious how Arizona stacks up against its neighbors? Check the calculators for Nevada, California, New Mexico, and Colorado.
Calculate Your Take-Home Pay
Estimate only. Does not include local sales tax, pre-tax deductions like 401(k) or health insurance, or the new tips and overtime exemption that starts July 1, 2026. Consult a tax professional for exact figures.
Every Deduction on an Arizona Paycheck
- Federal income tax: Withheld based on your W-4 and the 2026 IRS brackets, which run from 10% to 37% depending on taxable income and filing status.
- Social Security tax: A flat 6.2% on wages up to $184,500 for 2026, capping out at $11,439 for the year.
- Medicare tax: 1.45% on all wages with no cap, plus an extra 0.9% once you cross $200,000 as a single or head of household filer, or $250,000 filing jointly.
- Arizona state income tax: A flat 2.5% on Arizona taxable income, which is your gross income minus the state standard deduction and any applicable credits or subtractions.
- Local income tax: None. Arizona law blocks cities and counties from taxing wages, so there’s no municipal line on any Arizona pay stub.
- Pre-tax deductions: 401(k) contributions, HSA contributions, and employer health insurance premiums reduce your taxable wages before any of the above taxes are calculated.
Arizona’s Big 2026 Tax Code Overhaul
Arizona went through an unusually messy legislative fight to get its 2026 tax rules settled. Governor Katie Hobbs vetoed three separate conformity bills, first SB 1106 in January, then HB 2785 in February, then HB 4152 in May, before finally signing House Bill 4168 on June 13, 2026, as the taxation piece of her “Arizona First” budget. The delay meant Arizona taxpayers were filing 2025 returns without knowing the final rules, something Republican lawmakers publicly criticized as needless confusion during tax season.
What HB 4168 actually changed matters more than the fight that got it there. The bill sets Arizona’s standard deduction at fixed dollar amounts tied to 2025 federal levels rather than automatically tracking future federal inflation adjustments, adds a new $6,000 deduction for taxpayers 60 and older, exempts qualified tips and overtime pay from state tax starting July 1, 2026, and raises the dependent tax credit from $100 to $125 per child under 17. It also brings Arizona into full conformity with the federal One Big Beautiful Bill Act, meaning most federal OBBBA provisions now flow through to state returns as well.
Arizona Standard Deduction (2026)
| Filing Status | Standard Deduction |
|---|---|
| Single / Married Filing Separately | $15,750 |
| Head of Household | $23,625 |
| Married Filing Jointly | $31,500 |
Taxpayers who take the standard deduction can also add back the full amount of their charitable contributions, capped at $1,000 for single filers and those married filing separately, a more generous rule than the old system that only allowed a percentage of contributions to count.
Arizona vs Nearby States at $70,000 (Single)
| State | State Income Tax Owed | Estimated Net Pay |
|---|---|---|
| Arizona | $1,356 | $56,719 |
| Nevada | $0 | $58,075 |
| New Mexico | $2,141 | $55,934 |
| Colorado | $2,372 | $55,703 |
Arizona lands closer to Nevada’s zero-tax number than to New Mexico or Colorado at this income level, which is exactly the pitch that’s drawn so many transplants over the past few years. The gap widens fast at higher incomes too, since Arizona’s rate never climbs above 2.5% no matter how much someone earns, while Colorado’s flat 4.4% and New Mexico’s progressive system both take a growing bite as income rises.
Arizona’s Tax Trade-Offs
| Category | Arizona | National Average |
|---|---|---|
| State income tax | Flat 2.5% | ~5.5% |
| Combined sales tax (avg) | 8.52% | ~7.0% |
| Effective property tax rate | 0.48% | ~1.0% |
| Estate/inheritance tax | None | Varies by state |
| Tax Foundation 2026 ranking | 14th overall | N/A |
Arizona wins clearly on income tax and property tax, ranking well on both fronts according to the Tax Foundation. Sales tax is the weak spot: the state calls it a Transaction Privilege Tax rather than a traditional sales tax, and once city and county rates stack on top of the 5.6% state rate, Arizona’s combined average lands well above the national norm. It’s the one category dragging an otherwise strong overall ranking of 14th nationally.
Military Retirees and Snowbirds in Arizona
Arizona has quietly become one of the more attractive states for military retirees, since military retirement pay is fully exempt from state income tax alongside Social Security benefits. Combined with low property taxes and no state tax on either income source, a retiree living primarily on a military pension and Social Security can end up paying very little to the state regardless of income level. Arizona State Retirement System pensions get partial treatment instead of a full exemption, so public employee retirees should check their specific plan before assuming the same zero-tax outcome.
Seasonal residents, the so-called snowbirds who split time between Arizona and a northern state, need to pay close attention to residency rules. Arizona taxes full-year residents on all income regardless of where it was earned, but only taxes part-year and nonresidents on Arizona-source income. Someone who spends significant time in Arizona without formally establishing residency there can end up owing tax to both states unless they document their situation carefully.
Federal Tax Bracket Example: $70,000 Single Filer
Start with $70,000 in gross wages. Subtract the 2026 federal standard deduction of $16,100, leaving $53,900 in taxable income. Here’s how the brackets apply:
- 10% on the first $12,400 = $1,240
- 12% on the next $38,000 (from $12,400 to $50,400) = $4,560
- 22% on the remaining $3,500 (from $50,400 to $53,900) = $770
Total federal tax: $6,570, an effective rate of about 9.4% on gross pay. Add Arizona’s flat 2.5% state rate on top of that (after the Arizona standard deduction), and this filer’s total income tax bill still lands well below what the same income would owe in most states with an income tax.
Frequently Asked Questions
What is Arizona’s state income tax rate in 2026?
A flat 2.5% on all taxable income, regardless of filing status or how much you earn. Arizona moved to this single rate in 2023 and it has held steady since, making it the lowest flat income tax rate of any state that taxes wages.
What is Arizona’s standard deduction for 2026?
$15,750 for single filers and married people filing separately, $23,625 for head of household, and $31,500 for married filing jointly. These figures come from House Bill 4168, the taxation omnibus bill Governor Katie Hobbs signed on June 13, 2026, and they match 2025 federal levels rather than the higher 2026 federal amounts.
Does Arizona have a local or city income tax?
No. State law blocks cities and counties from levying their own income tax. A paycheck in Phoenix, Tucson, Mesa, or anywhere else in Arizona shows only the flat state rate, with no separate municipal line.
Is Social Security taxed in Arizona?
No. Arizona fully exempts Social Security benefits from state income tax at every income level. Military retirement pay is also fully exempt, which is part of why the state draws a large population of military retirees.
How high is sales tax in Arizona?
The state rate is 5.6%, technically called a Transaction Privilege Tax rather than a traditional sales tax. Cities and counties add their own rates on top, pushing the average combined rate to about 8.52%, among the higher combined rates in the country even though the base state rate looks modest.
What changed with Arizona’s tax code in 2026?
Governor Katie Hobbs signed HB 4168 on June 13, 2026, after vetoing three earlier versions of similar legislation. It set the new standard deduction amounts, added a $6,000 deduction for seniors, exempted tips and overtime pay from state tax starting July 1, 2026, and brought Arizona into full conformity with the federal One Big Beautiful Bill Act.
Arizona’s pitch is simplicity: one flat rate, no city income tax, and a tax code that just went through its biggest overhaul in years to lock in a bigger standard deduction and new exemptions for tips and overtime. The trade-off shows up at the cash register instead of on a pay stub, since the state’s combined sales tax rate is one of the areas where Arizona actually costs residents more than most of the country.