Withholding Calculations
How Do I Determine Which Percentage to Elect?
Every employee must consider the facts of their own situation and adjust their election accordingly. Be sure to take into account any amount already withheld for this year.
If you want to withhold more, choose one of the higher percentages or choose to have an additional amount withheld.
Note: Under-withholding can result in you owing tax and/or underpayment penalties when you file your Arizona return at the end of the year.
For tax year 2023 and beyond, the tax rate for Arizona taxable income is 2.5%.
How to Calculate Withholding
The withholding formula helps you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck.
The withholding formula helps you determine whether you need to give your employer a new Form A-4, Arizona Withholding Percentage Election. You can use your results from the formula to help you complete the form and adjust your income tax withholding.
Keep in mind that the results will only be as accurate as the information you provide. If your circumstances change during the year, recalculate with the new information to make sure that your withholding is still correct.
Use the table below to determine how to keep your Arizona withholding the same. Enter your annual gross taxable wages, the number of paychecks you receive each year, your annual withholding goal, the amount already withheld for this year, the number of paychecks remaining in this year, and select the largest percentage on line 10 that is less than line 9.
| Your Calculation | Example | |||
|---|---|---|---|---|
| 1 | Annual gross taxable wages | $52,000 | ||
| 2 | Number of paychecks per year | 26 | ||
| 3 | Divide line 1 by line 2. This is wages per paycheck. | 52,000/26 = $2,000 | ||
| 4 | Annual withholding goal | $1,800 | ||
| 5 | Amount already withheld | $600 | ||
| 6 | Balance of withholding for the calendar year. Subtract line 5 from line 4. | 1,800 - 600 = $1,200 | ||
| 7 | Number of paychecks remaining in the calendar year | 22 | ||
| 8 | Divide line 6 by line 7. This is your Arizona withholding goal per paycheck | $1,200 / 22 = $54.55 | ||
| 9 | Percentage: Divide line 8 by line 3 | 54.55 / 2,000 = 2.7% | ||
| 10 | Withholding percentage that is less than line 9. Check this box on line 1 of Form A-4 |
2.5% | ||
| 11 | Multiply line 10 by line 3 | 2.5% x $2,000 = $50.00 | ||
| 12 | Subtract line 11 from line 8. Enter this amount in the additional amount space on line 1 of Form A-4. |
54.55 - 50.00 = $4.55 |
Select a higher percentage for line 10 than line 9 if you want an overpayment (refund) and a lower percentage if you want an underpayment (owe).
Withholding percentage options.
Rates are a percentage of gross taxable wages
|
2023 and Beyond Percentage Rate |
|---|
| 0.5% |
| 1.0% |
| 1.5% |
| 2.0% |
| 2.5% |
| 3.0% |
| 3.5% |
Keep in mind for tax year 2023 and beyond, the tax rate for Arizona taxable income is 2.5%.