Arizona

Sales Tax

  • Statewide: 5.6%
  • Counties can levy sales tax of no more than 5.6%.
  • Current average sales tax (with local taxes included): 7.746%
  • Common Exceptions at State Level:
    • Prescription Medicine: Exempt
    • Unprepared Foods: Exempt*
  • Gasoline Tax: 37.40 cents/gallon (Includes all state, local, and federal taxes)
  • Diesel Fuel Tax: 51.40 cents/gallon (Includes all state, local, and federal taxes)
  • Cigarette Tax: $2.00/pack of 20
*Sales Tax Comments: Several cities levy a sales tax on unprepared foods.

 

Personal Income Tax

  • Personal Income Tax Rate Range: 5 brackets from 2.59% to 8.0% (on more than $250,000)
  • Standard deduction: Single filing Status: $12,550/Married Filing Jointly: $25,100. A larger deduction may be available if filer made charitable contributions.
  • Personal Exemption Allowance: $100 credit for each dependent under 17; $25 if over 17. Phases out as income increases.
  • Itemized Deductions Allowed? Yes. Subject to limitations.
  • Retirement Income
    • Social Security: Exempt
    • IRAs: Taxable at ordinary income tax rates*.
    • 401Ks/Defined contribution employer retirement plans: Taxable at ordinary income tax rates.*
    • Private pensions: Taxable at ordinary income tax rates.*
    • Public Pensions: Taxable at ordinary income tax rates.*
  • Military Pay
    • Active Duty Pay: Exempt
    • Military Retirement Pay: Exempt, retroactive to January 2021.
    • Military Disability Pay: Exempt
    • VA Disability Dependency & Indemnity Compensation Benefits: Exempt
    • SBP/SSBP/RCSBP/RSFPP: Exempt.
* Income tax comments: Standard deductions can be increased by 25% of the charitable donations if not itemizing. Proposition 208 created a surcharge of 3.5% (included in tax rates above) on income over $250,000. It is currently being litigated.

 

Property Tax

  • Local municipalities average .66% of the property's assessed value.
  • Calculation of assessed value: 10% of fair market value.
  • Relief programs for:
    • Disabled/Surviving Spouses: Eligible for up to $4,117 or more exemption if total assessed value doesn't exceed $27,760 and meet certain income requirements.
    • Renters or homeowners: Eligible for tax credit based on income.
    • Over 70: Can defer taxes if meet certain requirements.
    • 65 and over: Can freeze valuation if meet certain requirements.
  • Personal Property Tax: Yes. Rates and exemptions vary.

 

Inheritance & Estate Taxes: None

 

Department of Revenue website: www.azdor.gov

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