Arizona's income tax is the easiest in the country to explain. One rate, 2.5%, applied to everything above a standard deduction that matches the federal one. There are no brackets to walk, no filing-status thresholds to check, and no bracket table that goes stale in January.
On $85,000 a single filer pays $1,731 in Arizona income tax and takes home $66,896 — third-lowest of the 41 states that levy an income tax at all.
A note before you start. This is general education, not tax advice. Federal figures are tax year 2026, from IRS Revenue Procedure 2025-32 and the Social Security Administration; Arizona's rate and rules come from this site's own sourced 50-state dataset, citing A.R.S. Title 43 and the Arizona Department of Revenue. Every dollar figure is computed by the same engine the site's calculators use, on a single filer taking the standard deduction with no dependents or pre-tax deferrals unless stated. Arizona's transaction privilege tax and property tax are discussed qualitatively.
1. What Arizona takes
| Amount on $85,000 | |
|---|---|
| Gross salary | $85,000 |
| Federal income tax | −$9,870 |
| Social Security (6.2%) | −$5,270 |
| Medicare (1.45%) | −$1,233 |
| Arizona income tax | −$1,731 |
| Take-home | $66,896 |
Across incomes, single filer:
| Salary | Arizona tax | Effective AZ rate | Take-home |
|---|---|---|---|
| $30,000 | $356 | 1.19% | $24,929 |
| $45,000 | $731 | 1.62% | $37,607 |
| $60,000 | $1,106 | 1.84% | $49,284 |
| $85,000 | $1,731 | 2.04% | $66,896 |
| $120,000 | $2,606 | 2.17% | $90,644 |
| $175,000 | $3,981 | 2.27% | $126,898 |
Notice the effective rate climbing even though the statutory rate never moves. That is the standard deduction at work: $15,750 sheltered from a flat 2.5% is worth the same dollars to everyone, so it is a bigger share of a small salary than a large one. A flat tax is still mildly progressive as long as it sits behind a deduction.
Run your own salary against Arizona's flat rate2. Filing jointly
| Salary | Single AZ tax | Joint AZ tax | Difference |
|---|---|---|---|
| $30,000 | $356 | $0 | $356 |
| $45,000 | $731 | $338 | $393 |
| $60,000 | $1,106 | $713 | $393 |
| $85,000 | $1,731 | $1,338 | $393 |
| $120,000 | $2,606 | $2,213 | $393 |
| $175,000 | $3,981 | $3,588 | $393 |
The joint benefit is a flat $393 at every income above $45,000, and that constancy is the flat tax showing its shape. Arizona's joint standard deduction is double the single one — $31,500 against $15,750 — and 2.5% of the extra $15,750 is $393.75. There are no wider brackets to move into, because there is only one bracket.
Compare a graduated state: Minnesota's joint benefit at $85,000 is $1,264, and it grows with income because the couple's income spreads across bracket thresholds that also doubled. Arizona's does neither.
A couple where one spouse earns nothing gets $393. A couple where both earn $42,500 each gets the same $393. In a graduated state those two households can differ substantially. Here they cannot.
3. What the paycheck actually looks like
On $85,000 as a single filer:
| Pay schedule | Gross per cheque | Net per cheque |
|---|---|---|
| Weekly (52) | $1,634.62 | $1,286.46 |
| Biweekly (26) | $3,269.23 | $2,572.92 |
| Semi-monthly (24) | $3,541.67 | $2,787.33 |
| Monthly (12) | $7,083.33 | $5,574.67 |
Arizona withholding does not work the way the tax does. The state moved to a flat tax but kept a withholding system in which the employee elects a percentage of gross wages on Form A-4 — 0.5%, 1.0%, 1.5%, 2.0%, 2.5%, 3.0% or 3.5%, or zero if you expect no liability.
That election is a percentage of GROSS, and your actual tax is 2.5% of income AFTER the standard deduction. So electing 2.5% over-withholds: on $85,000 it takes $2,125 against a $1,731 bill, producing a $394 refund. Electing 2.0% withholds $1,700 — very close to right at this salary.
The practical consequence: a lot of Arizonans are lending the state a few hundred dollars a year interest-free because 2.5% looks like the obviously correct election. It is the tax rate; it is not the withholding rate that produces a zero balance. Check your A-4 against last year's actual liability rather than against the headline rate.
Withholding is an estimate, not the tax. Over-withholding produces a refund; under-withholding a bill. Neither changes what you owe.
4. Where Arizona sits nationally
At $85,000, against the 41 states that tax income:
| State | Tax on $85,000 |
|---|---|
| The nine no-income-tax states | $0 |
| North Dakota | $377 |
| Ohio | $1,621 |
| Arizona | $1,731 |
| Louisiana | $2,164 |
| Indiana | $2,478 |
| Pennsylvania | $2,610 |
| Colorado | $3,032 |
| California | $3,660 |
| Oregon (highest) | $6,864 |
Third-lowest, and the two states below it get there differently. North Dakota has a graduated schedule with a zero bracket that runs past $49,000 of taxable income. Ohio has a zero bracket to $26,050 and then 2.75%. Arizona is the lowest flat rate, applied from the first taxable dollar.
Against its own neighbours the position is strong: California takes $3,660 at this salary, New Mexico $2,834, Colorado $3,032, Utah $3,685. Nevada takes nothing.
| Salary | AZ | CA | NM | NV |
|---|---|---|---|---|
| $45,000 | $731 | $783 | $968 | $0 |
| $85,000 | $1,731 | $3,660 | $2,834 | $0 |
| $175,000 | $3,981 | $12,030 | $7,244 | $0 |
At $45,000 Arizona and California are within $52 of each other, which will surprise anyone who assumes the gap is always large. California's graduated structure taxes the lower slices at 1% and 2%. The gap opens with income, and by $175,000 California takes three times as much.
5. The standard deduction is the part that makes it work
A low rate on a small base is not a low tax. Several states advertise modest rates and then allow almost no deduction — Pennsylvania's 3.07% applies from the first dollar of compensation, and Arkansas allows $2,470 against a top rate of 3.9%.
Arizona matches the federal standard deduction. For a single filer that is $15,750 on the figures in this dataset, and Arizona statute ties the amount to the federal figure rather than legislating its own.
Two consequences:
The deduction moves with federal law. When Congress raised the federal standard deduction, Arizona's rose with it automatically. That is unusual — most states either legislate their own amount or freeze at a figure that decays with inflation.
A worked comparison. Arizona at 2.5% behind a $15,750 deduction charges $1,731 on $85,000. Pennsylvania at 3.07% behind no deduction charges $2,610. The rates are within 0.57 points; the bills differ by $879, and every dollar of that difference is the deduction.
One caveat this article will not paper over: the $15,750 in this dataset is the figure that had been confirmed at the time of writing, and Arizona's amount tracks the federal one. If the 2026 federal deduction is $16,100, Arizona's tax at $85,000 is about $9 lower than shown here. Small, and it is the kind of thing worth stating rather than smoothing over.
Itemising rarely helps
Because the standard deduction matches the federal one, an Arizonan who takes the federal standard deduction almost always takes the state one too. The state-level decision usually follows the federal decision rather than being made separately, which removes a step that costs people money in states where the two diverge.
One rate is not the same as one form
A flat tax simplifies the arithmetic and not always the return. Arizona still runs its own set of additions and subtractions on Form 140 — the capital gains subtraction in the previous section, the Social Security subtraction, the public pension exclusion, contributions to a 529 plan, and Arizona's unusually generous set of tax credits for contributions to qualifying charitable organisations, foster care organisations, public schools and private school tuition organisations.
Those credits are worth naming because they are dollar-for-dollar and they are the reason many Arizonans owe nothing at all. A credit reduces the tax itself rather than the income it is charged on, so a $400 charitable credit is worth $400 to a $30,000 earner and $400 to a $300,000 earner — where a $400 deduction would be worth $10 to each of them at 2.5%.
Against a $1,731 bill on $85,000, a household making qualifying contributions across two or three of those categories can extinguish a large share of its Arizona liability. That is a real planning lever and it is far more consequential here than in a state where the underlying tax is four times as large.
The point for a take-home figure: the number in section 1 is the tax before credits, and Arizona has more of them, aimed at ordinary households, than most states do.
6. The capital gains subtraction that survived the flat tax
This is the genuinely distinctive feature of Arizona's income tax, and it is routinely missed.
Arizona allows a subtraction of 25% of net long-term capital gain included in federal adjusted gross income. It is in A.R.S. 43-1022, and it survived the state's move to a flat tax rather than being repealed alongside the bracket structure.
What that means in practice. Most states tax capital gains as ordinary income with no preference at all — Colorado, Connecticut, Georgia, Idaho and the large majority of others. Arizona is in the minority that does not.
At 2.5% with a quarter of the gain subtracted, the effective Arizona rate on a long-term gain is 1.875%.
| Realised long-term gain | Arizona tax at 2.5% flat | With the 25% subtraction |
|---|---|---|
| $50,000 | $1,250 | $938 |
| $200,000 | $5,000 | $3,750 |
| $500,000 | $12,500 | $9,375 |
On a $500,000 gain the subtraction is worth $3,125. For someone selling a business, unwinding a concentrated position, or realising a large gain on an investment property, that is a real number and it is easy to miss because Arizona's flat rate invites the assumption that nothing is special.
Short-term gains get no preference. The subtraction is for net long-term capital gain, so the holding period matters here in a way it does not in most states.
7. No local income tax, and the tax that gets mistaken for one
No Arizona city, town or county levies a personal income tax.
What Arizona has instead is the transaction privilege tax, and the name causes genuine confusion. The TPT is Arizona's sales tax analogue, but it is legally a tax on the seller for the privilege of doing business, rather than a tax on the buyer. In practice it is passed through at the register and behaves like a sales tax.
Cities levy their own TPT on top of the state rate, and the combined rates are among the higher ones in the country. Phoenix, Tucson, Scottsdale and Mesa all set their own.
Three things that follow:
Your take-home figure needs no local asterisk. Unlike Ohio, Pennsylvania or Kentucky, no Arizona municipality reaches your paycheck.
Your grocery bill might. Some Arizona cities levy TPT on food for home consumption where the state does not, so whether you pay tax on groceries depends on the city. This has been the subject of repeated legislative attention.
Residential rental was historically taxed by cities as a TPT category, which is unusual nationally and has also been the subject of legislative change. If you rent, it is worth knowing that your city's treatment of residential rental is a live question rather than a settled one.
The trade is clear enough: Arizona keeps income tax very low and raises a larger share at the register. That favours high earners and savers, and falls harder on households that spend most of what they earn.
8. Retirees: the half of the story that gets told
Arizona is routinely listed as retiree-friendly, and the listing is half right.
Social Security is fully exempt. No age condition, no income threshold, no phase-out. A.R.S. 43-1022 subtracts the federally taxable portion of benefits in full. Someone whose retirement income is entirely Social Security pays no Arizona income tax.
Military pensions are fully exempt. No cap.
Public pensions get a $2,500 exclusion ($5,000 married filing jointly) — a specific, modest amount for benefits from Arizona state and local retirement systems and from the federal government.
Private pensions are fully taxable. No subtraction of any kind.
And 401(k), 403(b) and traditional IRA distributions are fully taxable. No general exclusion, no age trigger, no income limit.
That last one is the part the rankings skip, and it is the one that matters most, because for a large share of today's retirees the 401(k) is the retirement plan.
| Retirement income | Arizona tax |
|---|---|
| $40,000 all Social Security | $0 |
| $40,000 all 401(k) withdrawals, single | $606 |
| $70,000 — $30,000 SS + $40,000 401(k) | $606 |
At 2.5% the amounts are small in absolute terms, which is the real answer: Arizona is not retiree-friendly because it exempts retirement income, it is retiree-friendly because its rate is low on everything. Those are different claims and only one of them survives contact with a 401(k).
There is no estate or inheritance tax.
9. What you can control
Pre-tax deferrals save 2.5% at state level, on top of your federal rate. A $10,000 traditional 401(k) contribution saves an $85,000 earner $2,200 federally plus $250 in Arizona tax — $2,450 total.
That $250 is small compared with Oregon's $875 or California's $930 on the same deferral. The case for deferring in Arizona is overwhelmingly federal, which has a practical implication: if you expect to retire in a state with a higher income tax than Arizona, deferring here and withdrawing there loses you money at the state level. The reverse — deferring in a high-tax state and withdrawing in Arizona — is the favourable direction, and it is one of the reasons Arizona attracts retirees from California.
HSA contributions through payroll cut federal tax, Arizona tax and FICA. On $4,400 that is roughly $968 federal, $110 Arizona and $337 FICA — about $1,415, or 32% of the amount contributed.
Roth versus traditional is nearly a pure federal question here. The 2.5% you would deduct against today is small enough that the state side barely enters it.
Long-term over short-term, more than in most states, because of the 25% subtraction in section 6.
10. Moving to Arizona
From California, the income tax saving is $1,929 a year at $85,000 and $8,049 at $175,000. Real, and smaller than most people assume at middle incomes — at $45,000 it is $52.
From Nevada, you are moving to an income tax, not away from one. Arizona costs $1,731 a year at $85,000 that Nevada does not.
Budget for the TPT. Combined state and city rates are high, and the treatment of groceries and residential rental varies by city.
Property tax is comparatively low, which is a genuine part of the picture and one of the more favourable elements for homeowners.
Establish residency properly if you move mid-year. California in particular scrutinises departures where property, family or business connections remain.
Frequently asked questions
What is Arizona's income tax rate? A single flat 2.5% on income above the standard deduction — the lowest flat income tax rate in the United States. There are no brackets and no filing-status thresholds.
What is take-home pay on $85,000 in Arizona? $66,896 for a single filer taking the standard deduction, after $9,870 federal income tax, $6,503 FICA and $1,731 Arizona income tax.
Why is my effective Arizona rate below 2.5%? Because the standard deduction comes off first. At $85,000 the effective rate is 2.04%; at $30,000 it is 1.19%. A flat tax behind a fixed deduction is still mildly progressive.
Should I elect 2.5% on my A-4 withholding form? That over-withholds. The A-4 percentage applies to gross wages, while the tax applies to income after the standard deduction — so 2.5% withholds $2,125 on $85,000 against a $1,731 bill. Around 2.0% lands closer at that salary. Check your own prior-year liability rather than matching the headline rate.
Does Arizona tax capital gains? Yes, but with a preference most states do not offer: 25% of net long-term capital gain is subtracted, making the effective rate 1.875%. Short-term gains get no subtraction.
Can an Arizona city tax my income? No. Arizona's local taxes are transaction privilege taxes, levied on sellers and passed through at the register. No municipality reaches your paycheck.
Does Arizona tax retirement income? Social Security and military pensions are fully exempt. Public pensions get a $2,500 exclusion. Private pensions and 401(k), 403(b) and IRA distributions are fully taxable at 2.5% — no exclusion, no age trigger. There is no estate or inheritance tax.
How much does Arizona save me against California? $1,929 a year at $85,000 and $8,049 at $175,000. At $45,000 it is only $52, because California's graduated structure taxes the lower slices at 1% and 2%.
What to do next
Arizona's answer is unusually simple: one rate, a federal-sized deduction, no local layer. The parts worth checking are your A-4 election and, if you have gains to realise, the 25% subtraction.
- Arizona take-home pay calculator — your salary with every deduction shown separately.
- Your Paycheck in the USA in 2026 — all fifty states on one salary.
- Take-Home Pay in California — the state most Arizonans are comparing against.
- Marginal vs Effective Tax Rate — why 2.5% is not what you pay.
- 50/30/20 budget calculator — built on take-home rather than salary.
Every figure on this site is sourced and dated. How we source every number.
Figures in this article are illustrations computed by this site's own tax engine for tax year 2026, on a single filer taking the standard deduction with no dependents or pre-tax deferrals unless stated. Federal figures come from IRS Revenue Procedure 2025-32 and the Social Security Administration; Arizona's rate, deduction and retirement rules from this site's sourced 50-state dataset, citing A.R.S. Title 43 and the Arizona Department of Revenue. Arizona's standard deduction tracks the federal figure, and the amount used here is the one confirmed at the time of writing; the transaction privilege tax and property tax are discussed qualitatively rather than computed. This is general education and not tax advice; consult a licensed tax professional for your own situation.