Withholding FAQs

Due to passage of Senate Bill 1828 by the Arizona Legislature in the 2021 session, Arizona's individual income tax rates were substantially reduced starting with the 2022 tax year. The previous Form A-4 withholding rates are no longer representative of the new lower income tax rates.

For tax year 2022, there are two individual income tax rates, 2.55% and 2.98%. The new flat tax of 2.5% will affect the 2023 tax year – which is filed by April 2024. The tax year 2022 tax table will be posted online in December 2022.

The employer should retain the A-4 with their employee and tax records. The employee may want to retain a copy for their records as well. Do not send the new A-4 Form to the Arizona Department of Revenue.

The employer should select 2.0% on behalf of the employee. The new default Arizona withholding rate is 2.0%.

Yes, the employer should then select 2.0% as the default rate. This means by March 2023 the paychecks would have the default rate chosen for them.

If the employee fails to fill out the new Form A-4 within two pay periods after the January 31, 2023 deadline, the employer should then select 2.0% as the default rate.

If the employee does not select a new tax rate within two pay periods after the January 31, 2023 deadline, the employer should then select 2.0% as the default rate.

Employeer may implement the new Form A-4 immediately, but may choose to default to 2.7% within the two first pay period after January 31, 2023.

Employee must implement the new withholding tax rate within two pay periods after the January 31, 2023 deadline.

Why is Form A-4 changing for tax year 2022?

What are the tax rates in 2022 and 2023?

What should the employer do with the new completed A-4 forms?

What if the employee does not fill out a new tax rate by January 31 (or is out for an extended time)?

If a current employee does not complete the new form by February 1, 2023, should the employer withhold at the default rate of 2.0% in the first pay period following January 31, 2023?

If a current employee does not select a new tax rate, how long should that form be effective before the employer is required to withhold at the default rate of 2.0%?

If currently withholding at the 2022 default rate of 2.7% prior to January 1, 2023, should the employer continue to withhold at the default rate of 2.7% after January 1, 2023 or should the employer reset the employees rate to the 2023 default rate of 2.0%

If hiring a new employee prior to January 1, 2023, should the employer withhold 2.0% in the first pay period following January 1, 2023?

What is the date that the new rates must be enforced by the employer?

Arizona Department of Revenue