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Relocating to Arizona?
The Arizona Department of Revenue often receives requests for general Arizona tax information from people who are thinking about moving to Arizona. The department has drafted this document to provide that information. For complete details, refer to the Arizona Revised Statutes and the Arizona Administrative Code. In case of inconsistency or omission in this document, the language of the Arizona Revised Statute and the Arizona Administrative Code will prevail.
PERSONAL INCOME TAXES
Arizona imposes its income tax on residents and on nonresidents that earn income in Arizona. The starting point for the income tax computation for Arizona residents is the federal adjusted gross income (Arizona gross income). This amount is then subject to certain additions and subtractions to arrive at Arizona taxable income. Since Arizona starts with the federal adjusted gross income, any income that is taxable for federal purposes will also be subject to Arizona tax unless such income is specifically excludable under Arizona law.
Additions to Income
Arizona law requires a taxpayer to add certain items to his or her Arizona gross income. One of the items a person must add to income is interest income from non-Arizona municipal bonds. The Form 140 instructions have a full list of items that a person must add. You may view the form 140 instructions by visiting our web site, or you may order a Form 140 booklet. You can find the web site address and telephone numbers later in this document.
Subtractions from Income
Arizona law also provides that a person may subtract certain items from his or her Arizona gross income. Some of the items that a person may subtract from income include interest from U.S. Government obligations, social security benefits, and benefits received under the Railroad Retirement Act. A person may also subtract up to $2,500 of income for U.S. Government and Arizona state or local pension income. Public retirement pensions from states other than Arizona and private pensions do not qualify for this subtraction. The Form 140 instructions have a full list of items that a person may subtract.
Deductions
A person may take a standard deduction or he or she may itemize deductions. The standard deduction for a single person or a married person who files a separate return is $4,050. The standard deduction for a head of household or a married couple who file a joint return is $8,100.
A person may claim itemized deductions on his or her Arizona return even if the person takes a standard deduction on the federal return. For the most part, a person may claim those deductions allowable as itemized deductions under the Internal Revenue Code.
Exemptions
A taxpayer may claim a personal exemption. The exemption for a single person is $2,100. The exemption for person who is an unmarried head of household or a married couple that claim no dependents is $4,200. The exemption for a married couple that claims at least one dependent is $6,300.
A taxpayer may also claim an additional exemption for being blind or over age 65. The exemption for each taxpayer that is age 65 or over is $2,100. The exemption for each taxpayer that is blind is $1,500. A taxpayer may also claim an exemption of $2,300 for each of his or her dependents. An Arizona resident may claim an exemption of $10,000 for each of his or her parents or ancestors that qualify for this special exemption. The Form 140 instructions list the criteria for this exemption.
Arizona's personal income tax rates
Arizona Tax Rates for Single Taxpayers and Married Taxpayers Filing Separate Returns
If Arizona taxable income is: The tax is:
?$ 0 $ 10,000 2.87% of taxable income
?$10,001 $ 25,000 3.20% of taxable income less $33.00
$ 25,001 $ 50,000 3.74% of taxable income less $168.00
$ 50,001 $150,000 4.72% of taxable income less $658.00
$150,001 and over 5.04% of taxable income less $1138.00
Arizona Tax Rates for Married Taxpayers Filing Joint Returns and Heads of Household
If Arizona taxable income is: The tax is:
$ 0 $ 20,000 2.87% of taxable income
$ 20,001 $ 50,000 3.20% of taxable income less $66.00
$ 50,001 $100,000 3.74% of taxable income less $336.00
$100,001 $300,000 4.72% of taxable income less $1316.00
$300,001 and over 5.04% of taxable income less $2276.00
AUTOMOBILES
Taxes that apply to automobiles include gas taxes, registration fees, and motor vehicle taxes.
Driver's License
The fee to obtain an Arizona driver's license varies depending on the class of license and the age of the driver. The fee to obtain a standard license for a person age 50 or older is $10.00. The fee for persons age 45 to 49 is $15.00. The fee for persons age 40 to 44 is $20.00. The fee for persons age 39 or younger is $25.00.
Vehicle Registration Fee and Motor Vehicle License Tax
There is a registration fee of $8.00 (or $8.25 in metro Phoenix and Tucson, including 25¢ air quality compliance sticker fee); plus an air quality research fee of $1.50; plus a vehicle license tax (VLT) assessed in place of a personal property tax charged by other states. There may also be a weight fee for commercial vehicles and other fees. The VLT is based on an assessed value of 60% of the manufacturer's base retail price reduced by 16.25% for each year since the vehicle was first registered in Arizona. As of the Dec 1, 2000, the rate is calculated as $2.80 (new vehicles)/$2.89 (used vehicles) for each $100 of the assessed value. For example, for a new vehicle that costs $25,000, the first year assessed value would be $15,000 and the VLT would be $420.00. The second year the assessed value would be $12,562.50 and the VLT would be $363.06.
A resident must register his or her vehicle and pay the motor vehicle license tax on an annual basis. Special rates apply for alternative fuel vehicles
Gas tax
Arizona imposes a tax on gasoline at the rate of 18 cents a gallon. This is in addition to the amounts imposed by the federal government.
ESTATE TAXES
Inheritance and Gift Taxes
Arizona has neither an inheritance tax nor a gift tax.
Estate tax
The Arizona estate tax applies to estates required to file a federal estate tax return. This tax is designed to absorb the maximum credit for state death taxes allowed on the federal estate tax return. This type of tax, often referred to as a "pick-up tax", amounts to the state death tax credit allowed on the federal return.
PROPERTY TAXES
Arizona property tax rate for owner-occupied residential real property
Arizona statutes list several classes of properties with varying assessment ratios or percentages of full cash value. 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 levy to be raised. The combined tax rate applicable to each parcel of property is the sum of the state, county, municipal, school, and special district rates. Total tax rates may vary considerably from one area to another.
For more detailed information, call the county assessor's office for the specific county for which you are seeking information.
Property tax on household goods or intangible personal property
Arizona does not have a property tax on household goods or intangible personal property.
ARIZONA TRANSACTION PRIVILEGE TAXES (SALES TAXES)
Arizona transaction privilege (sales) and use tax rates generally are 6.3 percent. Currently, all fifteen counties levy a tax. Incorporated municipalities also levy transaction privilege taxes which, with the exception of their transient lodging (hotel/motel) tax, are generally in the range of 1% to 3%. The state rate on transient lodging (hotel/motel) is 7.27%. The state of Arizona does not levy a state tax on food for home consumption or on drugs prescribed by a licensed physician or dentist. However, some cities in Arizona do levy a tax on food for home consumption.
THis information comes from the Official Website of the Arizona Department of Revenue
Additional information is available through:
Telephone: Income: 602-255-3381; Toll free from area codes 520 & 928, 1-800-352-4090
Transaction Privilege Tax: 602-255-2060; Toll free from area codes 520 & 928, 1-800-843-7196
our web site at www.revenue.state.az.us
recorded tax information: 602-542-1991
or write to: Taxpayer Information and Assistance
P.O. Box 29086
Phoenix, AZ 85038-9086
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