TAX & LICENSE / STATE TAX SYSTEM

State Income Tax
Arizona imposes a personal income tax that uses the federal adjusted gross income as the starting point for tax computation. Since Arizona uses the federal adjusted gross income, any income that is taxable for federal purposes will also be subject to Arizona tax unless specifically excluded. Additions include interest income from non-Arizona municipal bonds. Subtractions include interest from federal government obligations, social security benefits, and those benefits that were received under the Railroad Retirement Act.

Deductions and Exemptions
Taxpayers may take a standard deduction or itemize their deductions. The standard deduction and personal exemptions for a single person or a married person who files a separate return is $4,373. The deduction and personal exemption for head of household or a married couple who file a joint return is $8,745. Taxpayers may itemize deductions on their Arizona state return even if they filed a standard deduction on the federal tax return. State income tax is calculated on a variable scale based on income level, with the lowest rate being 2.87 percent of taxable income and a maximum of 5.04 percent minus $2,276 for the excess over $300,000 for joint filers. For information on income tax or answers to your questions, contact:

Arizona State Tax Information
1600 West Monroe
Phoenix 800-352-4090
https://azdor.gov/

Frequently Requested Numbers
Income Tax 602-255-3381
TDD Line 602-542-4021
Refund Status 602-255-3381
Forms by Mail 602-542-4260
Problem Resolution 602-716-6024

School Tax Credit
Arizona offers a way to support your local schools and receive a tax credit at the same time. Although this credit applies to fees or cash contributions paid to a public school for the support of extracurricular activities, you do not have to be a parent or have children in school to benefit. The credit is equal to the amount contributed with a limit of $200 for single taxpayers and $300 for taxpayers who are filing jointly (from 2006 forward, the credit for joint filers will be $400).

Property Tax
The assessment ratio for owner-occupied residential property is 10 percent of full cash (market) value. Tax jurisdictions set tax rates on the basis of the total assessed valuation within their boundaries and the amount of the required levy. This combined rate is the sum of state, county, municipal, school, and special district rates. For more information, contact the county assessor or visit one of the branch locations:

Maricopa County Assessor
301 W. Jefferson Street
Phoenix 602-506-3406
https://preview.mcassessor.maricopa.gov/

Mesa Facility
943 S. Gilbert
Mesa 602-506-3406

Northwest Facility
16700 N. 51st Avenue
Phoenix 602-506-3406

Scottsdale Facility
15023 N. 75th Street
Scottsdale 602-506-3406

Tempe Facility
8140 S. Hardy Drive
Tempe 602-506-3406

Westside Facility
125 S. Avondale Boulevard
Avondale 602-506-3406

Estate, Inheritance & Gift Taxes
Effective January 1, 2005, federal law eliminated the state death tax credit; therefore, Arizona no longer imposes an estate tax. Residents pay no gift, inheritance, poll, or intangible personal property tax.

Vehicle License Tax
Arizona imposes an annual motor vehicle license tax or VLT in lieu of the personal property tax that many other states impose on automobiles. The VLT is based on an assessed value of 60 percent of the base retail price set by the manufacturer, which is reduced by 16.25 percent for each year the vehicle has been registered in Arizona. For each $100 of assessed value, the current tax rate is $2.80 for new vehicles and $2.89 for used vehicles. Vehicle registration and tax payments are annual but two-year rates are optional. Special rates apply to alternative fuel vehicles. For information, contact:

Vehicle License Division
Arizona Department of Transportation
Phoenix 602-255-0072
https://azdot.gov/

General Sales/Use Tax
Retail sales tax in Arizona is 5.6 percent. Counties and municipalities add to this base state sales tax rate. Arizona does not levy a state tax on food for consumption at home or on drugs prescribed by a licensed physician or dentist, but some cities do levy a tax on food for home consumption. Use taxes of 5.6 percent apply to merchandise purchased outside of Arizona such as catalog or Internet orders where no tax was paid but the goods are “used” in Arizona. For more information, contact:

Arizona State Tax Information
1600 West Monroe
Phoenix 800-352-4090
https://azdor.gov/