In the state of Arizona, an employer must withhold income tax from employee wages for services performed in Arizona. The state income tax withholding is a percentage of the employee’s gross taxable wages.
Gross taxable wages refers to the amount that meets the federal definition of wages contained in U.S. Code § 3401 and is included in box 1 of the employee’s federal W-2 form at the end of the calendar year (i.e. gross wages net of pretax deduction, such as the employee’s portion of health insurance premiums). Employees may also have their employer withhold an additional amount.
To elect an Arizona withholding percentage, an employee completes Arizona Form A-4, Arizona Withholding Percentage Election. Amounts considered wages for federal tax purposes are also considered wages for Arizona income tax and withholding purposes.
Additionally, amounts included in wages and subject to mandatory federal withholding are subject to mandatory Arizona withholding. Amounts excluded from wages and from mandatory federal withholding are excluded from mandatory Arizona withholding.
Withholding Tax Tables
Arizona’s current withholding tables are based on a percentage of gross taxable wages. As stated, all new employees subject to Arizona income tax withholding must complete Arizona Form A-4 within five days of employment. Existing employees may also complete the form to change the previous withholding amount or percentage.
Employees who expect no Arizona income tax liability for the calendar year may claim an exemption from Arizona withholding. This exemption must be renewed annually, similar to federal requirements. Also, individuals with a current withholding percentage elected on Arizona Form A-4P or Arizona Form A-4V may also complete a new form to change the previous withholding amount or percentage.
|Withholding percentage options for wages paid.|
|Rates are a percentage of gross taxable wages|
Arizona Withholding Rules & Statutes
Rules: These can be read online at the Arizona Secretary of State Website
- A.A.C. R15-2b-101 Payment Schedule; Rates; Election by Employee
- A.A.C. R15-2B-102 Employment Excluded From Withholding
Statutes: The statutes are available online at the Arizona State Legislature site
- A.R.S. § 43-401 Withholding tax; rates; election by employee
- A.R.S. § 43-402 Definition of “employer”
- A.R.S. § 43-403 Employment excluded from withholding
- A.R.S. § 43-404 Extension of withholding to military retirement pensions and to other annuities; definition
- A.R.S. § 43-405 Extension of withholding to gambling winnings
- A.R.S. § 43-406 Extension of withholding to premature withdrawals of state and local government contributions
- A.R.S. § 43-407 Extension of withholding to unemployment compensation payments
- A.R.S. § 43-408 Voluntary withholding on out-of-state wages
- A.R.S. § 43-411 Employer entitled to address of employee
- A.R.S. § 43-412 Returns of withholding to be filed with department
- A.R.S. § 43-413 Statement of withholding to employees
- A.R.S. § 43-414 Liability for failure to withhold
- A.R.S. § 43-415 Withholding as trust fund for state
- A.R.S. § 43-416 Failure to remit withholding; classification
- A.R.S. § 43-417 Withholding without resort to legal action
- A.R.S. § 43-431 Amounts withheld considered part payment of tax
- A.R.S. § 43-432 Refund for excess withholding
- A.R.S. § 43-434 Exemption in case of nonresident employees
- A.R.S. § 43-433 Remedies for withheld taxes
- A.R.S. § 43-435 Failure to collect and pay over tax; personal liability