Tax policy in Arizona

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Tax policy in Arizona

Tax rates in 2017

Personal income tax: 2.59% to 4.54%

State sales tax: 5.60%

Corporate income tax: 5.50%

Tax revenues in 2016

Total tax collections: $14.68 billion

Tax collections per capita: $2,117

Total state expenditures • State debt • Arizona state budget and finances

Arizona generates the bulk of its tax revenue by levying a personal income tax and a sales tax. The state derives its constitutional authority to tax from Article 9 of the state constitution.

Tax policy can vary from state to state. States levy taxes to help fund the variety of services provided by state governments. Tax collections comprise approximately 40 percent of the states' total revenues. The rest comes from non-tax sources, such as intergovernmental aid (e.g., federal funds), lottery revenues and fees. The primary types of taxes levied by state governments include personal income tax, general sales tax, excise (or special sales) taxes and corporate income tax.

HIGHLIGHTS

According to the United States Census Bureau, Arizona collected $14.68 billion in tax revenue in 2016. The state's tax revenue per capita was $2,117.

Tax rates

Personal income tax

See also: Personal income tax

Arizona utilized a personal income tax rate ranging from 2.59 percent to 4.54 percent in 2017. An individual's tax liability varies according to his or her tax bracket. A tax bracket is the income range to which a tax rate applies.

The table below summarizes personal income tax rates for Arizona and neighboring states in 2017.

Personal income tax rates, 2017
State	Tax rates		Number of brackets	Brackets
	Lowest	Highest		Lowest	Highest
Arizona	2.59%	4.54%	5	$10,179	$152,668
Nevada	No state income tax
New Mexico	1.7%	4.9%	4	$5,500	$16,001
Utah	5%		1	Flat rate
Note: For complete notes and annotations, please see the source below. Source: Tax Policy Center, "Individual State Income Tax Rates 2000-2017," accessed October 26, 2017

Personal exemptions

States that collect a personal income tax allow individuals to claim personal exemptions on income taxes each year. The personal exemption indicates that only a person's income above a certain level is subject to taxation.

Exemptions work by reducing the amount of an individual's taxable income. Both state and federal taxes allow exemptions. The state exemptions for Arizona and its neighboring states as reported by the Tax Policy Center are reported in the chart below.

Personal exemptions, 2017
State	Single	Married	Dependents
				Arizona	$2,100	$4,200	$2,300
Nevada	No state income tax
New Mexico	$4,050	$8,100	$4,050
Utah	6% tax credit	6% tax credit	6% tax credit
Note: For complete notes and annotations, please see the source below. Source: Tax Policy Center, "Individual State Income Tax Rates 2000-2017," accessed October 26, 2017

Capital gains tax

See also: Capital gains tax

A capital gains tax is a tax levied on the profit gleaned from the sale of a capital asset. Examples of capital assets include stocks, businesses, land parcels, homes, personal items and more. Capital gains are taxable at both the federal and state levels. While the federal government taxes capital gains at a lower rate than regular personal income, states usually tax capital gains at the same rates as regular income.

The table below summarizes uppermost capital gains tax rates for Arizona and neighboring states in 2015.

Uppermost capital gains tax rates by state, 2015
State	State uppermost rate	Combined uppermost rate
			Arizona	4.5%	27.7%
Nevada	0%	25%
New Mexico	4.9%	26.5%
Utah	5%	28%
Note: For complete notes and annotations, please see the source below. Source: Tax Foundation, "The High Burden of State and Federal Capital Gains Tax Rates," accessed October 26, 2017

Sales tax

See also: Sales tax

Almost all states employ a statewide sales tax, which ranges from 2.9 percent in Colorado to 7.25 percent in California. Additionally, many states allow the levying of local sales taxes, which are then added to the state's tax.

Arizona's state sales tax was 5.60% percent in 2017. The average local tax was about 2.65% percent, meaning that the average combined sales tax was about 8.25% percent. The table below displays the state tax rates, average local tax rates, and average combined tax rates for Arizona and its neighboring states.

Combined sales tax rates, 2015
State	State sales tax	Average local sales tax	Combined
Arizona	5.60%	2.65%	8.25%
Nevada	6.85%	1.13%	7.98%
New Mexico	5.13%	2.43%	7.55%
Utah	5.95%	0.81%	6.76%
Note: For full annotations, see the source below. Source: The Tax Foundation, "State and local sales tax rates, 2017," accessed October 26, 2017

The table below summarizes sales tax rates for Arizona and neighboring states in 2017 as well as the state's policy with respect to types of items commonly exempted from sales tax (i.e., food, prescription drugs and nonprescription drugs).

Sales tax rates, 2017
State	Sales tax rate	Exemption status
		Food	Prescription drugs	Nonprescription drugs
Arizona	5.6%	Exempt	Exempt	Taxable
Nevada	6.9%	Exempt	Exempt	Taxable
New Mexico	5.1%	Exempt	Exempt	Taxable
Utah	6.0%	3	Exempt	Taxable
Source: Tax Policy Center, "Sales Tax Rates 2000-2017," accessed October 26, 2017

Excise taxes

See also: Excise taxes

Excise taxes, also known as selective sales or differential commodity taxes, are levied for the sales of specific goods or services. Excise taxes are considered indirect taxes because they are not charged directly to individuals. In most cases, the excise tax is paid by the producer or seller of an item. The cost of the tax is then included in the sale price of the item and passed on to the consumer. The tables below provide excise tax rates for motor fuel, alcohol and cigarettes in Arizona and neighboring states.

Fuel excise tax rates, 2017 (in cents per gallon)
State	Gasoline			Diesel			Gasohol
	Excise tax	Other taxes	Total tax	Excise tax	Other taxes	Total tax	Excise tax	Other taxes	Total tax
Arizona	18¢	1¢	19¢	26¢	1¢	27¢	18¢	1¢	19¢
Nevada	24¢	0.805¢	24.805¢	27¢	0.75¢	27.75¢	24¢	0.805¢	24.805¢
New Mexico	17¢	1.875¢	18.875¢	21¢	1.875¢	22.875¢	17¢	1.875¢	18.875¢
Utah	29.4¢	0¢	29.4¢	29.4¢	0¢	29.4¢	29.4¢	0¢	29.4¢
Note: For full annotations, see the source below. Source: Tax Policy Center, "State Motor Fuels Tax Rates 2000-2011, 2013-2017," accessed October 26, 2017

Alcohol excise tax rates, 2017 (in dollars per gallon)
State	Liquor		Wine		Beer
	Tax rate	Does general sales tax apply?	Tax rate	Does general sales tax apply?	Tax rate	Does general sales tax apply?
Arizona	$3.0	Yes	$0.8	Yes	$0.2	Yes
Nevada	$3.6	Yes	$0.7	Yes	$0.2	Yes
New Mexico	$6.1	Yes	$1.7	Yes	$0.4	Yes
Utah	See footnote 1	Yes	See footnote 1	Yes	$0.4	Yes
Note: For full annotations, see the source below. 1"In 17 states, the government directly controls the sales of distilled spirits. Revenue in these states is generated from various taxes, fees, price mark-ups, and net liquor profits." 2"General sales tax applies to on-premise sales only." Source: Tax Policy Center, "Alcohol Rates 2000-2010, 2013-2017," accessed October 26, 2017

State cigarette taxes, 2017 (in cents per pack)
State	Tax rate	National ranking
			Arizona	200¢	13
Nevada	180¢	19
New Mexico	166¢	23
Utah	170¢	21
Note: For full annotations, see the source below. Source: Tax Policy Center, "State Cigarette Taxes, 2017," accessed October 26, 2017

Corporate income tax

See also: Corporate income tax

Arizona levies a corporate income tax rate of 5.5 percent. The table below compares the corporate income tax rates of some of its neighboring states.

Corporate income tax rates, 2016
State	Tax rate	Brackets		Number of brackets
		Lowest	Highest
Arizona	5.50%	Flat Rate		1
Nevada	No corporate income tax
New Mexico	4.80% to 6.60%	$500,000	$1,000,000	3
Utah	5.00%	Flat Rate		1
Note: For complete notes and annotations, please see the source below. Source: Tax Foundation, "State Corporate Income Tax Rates and Brackets for 2015," accessed October 26, 2017

Property tax

See also: Property tax

Most often, property tax applies to real estate, although some states levy property taxes on other types of personal property, such as automobiles. Generally speaking, an individual's property tax liability is determined by the tax rate and the tax base, which is "determined by both the assessed value of the property and ... the share of the assessed value that is subject to tax." To learn more about property taxes, including tabulation methods, see this page. Property tax rates can vary substantially from locality to locality within a state.

The table below provides the mean amount of property taxes paid in 2012, as well as property tax as a mean percentage of home value for 2014, in Arizona and neighboring states.

Mean property taxes paid per state, 2012 and 2014
State	Mean property taxes paid (2012)	Property tax as a percent of home value (2014)
Arizona	$1,330	0.66%
Nevada	$1,518	0.71%
New Mexico	$1,325	0.66%
Utah	$1,514	0.63%
Source: Tax Policy Center, "Residential Property Taxes in the United States," November 18, 2013 Source: Tax Foundation, "Facts & Figures 2016: How Does Your State Compare?", accessed October 27, 2017

The table below lists per capita state and local property tax collections for Arizona and neighboring states for fiscal year 2013.

State and local property tax collections per capita, 2013
State	Collections per capita
		Arizona	$1,009
Nevada	$972
New Mexico	$685
Utah	$952
Source: Tax Foundation, "Facts and Figures 2016: How Does Your State Compare?" accessed October 26, 2017

Estate and inheritance taxes

See also: Estate and inheritance taxes

Estate and inheritance taxes are levied on the property of deceased individuals (decedents). Generally speaking, an estate tax is applied to the value of a decedent's property and is paid from the estate before distribution to any heirs. By contrast, an inheritance tax is paid by the heir or heirs of a decedent's assets.

Arizona does not levy an estate tax, although residents are liable for the federal estate tax. The table below summarizes the estate tax rates for Arizona and neighboring states in 2016.

Estate taxes, 2016
State	Exemption threshold	Minimum rate	Maximum rate
Arizona	N/A
Nevada	N/A
New Mexico	N/A
Utah	N/A
Note: For complete notes and annotations, please see the source below. Source: Tax Foundation, "Facts and Figures 2015: How Does Your State Compare?" accessed October 5, 2015

Tax revenues

See also: Arizona state budget and finances

The table below breaks down state government tax collections by source in 2016 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "2016 population" and "Per capita collections" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "2016 population" and "Per capita collections" have not been abbreviated.

State tax collections by source ($ in thousands), 2016
State	Property taxes	Sales and gross receipts	Licenses	Income taxes	Other taxes	Total	2016 population	Per capita collections
Arizona	$943,008	$8,680,009	$482,362	$4,538,472	$32,524	$14,676,375	6,931,071	$2,117
Nevada	$280,055	$6,347,777	$651,067	N/A	$746,147	$8,025,046	2,940,058	$2,730
New Mexico	$106,524	$2,930,004	$342,527	$1,523,753	$559,299	$5,462,107	2,081,015	$2,625
Utah	N/A	$3,031,819	$290,426	$3,707,893	$52,823	$7,082,961	3,051,217	$2,321
United States	$18,364,298	$442,909,995	$52,164,396	$392,286,910	$24,538,146	$930,263,745	322,762,018	$2,882.20
Source: U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed June 26, 2017

The table below lists 2016 tax collections by source as percentages of total collections. About 59.1 percent of Arizona's total state tax collections came from sales taxes and gross receipts.

State tax collections by source (as percentages), 2016
State	Property taxes	Sales and gross receipts	Licenses	Income taxes	Other taxes
Arizona	6.4%	59.1%	3.3%	30.9%	0.2%
Nevada	3.5%	79.1%	8.1%	N/A	9.3%
New Mexico	2.0%	53.6%	6.3%	27.9%	10.2%
Utah	N/A	42.8%	4.1%	52.3%	0.7%
Source: U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed April 4, 2016

Tax ballot measures

Voting on taxes
Ballot measures
By state
By year
Not on ballot
Local City taxes County taxes School taxes Property taxes Sales taxes Income taxes Other taxes

See also: Taxes on the ballot and List of Arizona ballot measures

Ballotpedia has tracked the following ballot measures relating to taxes in Arizona.

1. Arizona Proposition 203, Tobacco Taxes for Early Childhood Education Initiative (2006)
2. Arizona Proposition 101, Local Property Tax Levies Amendment (2006)
3. Arizona Proposition 104, Property Valuation Protection Amendment (2000)
4. Arizona Proposition 105, Property Tax Exemption for Human Cemeteries Amendment (2000)
5. Arizona Proposition 301, Sales Tax for Education Initiative (2000)
6. Arizona Proposition 102, Eligibility for Property Valuation Protection Amendment (2002)
7. Arizona Proposition 303, Reduction of Tobacco Consumption Initiative (2002)
8. Arizona Proposition 101, Property Tax Exemptions for Dual-Use Purposes Amendment (1996)
9. Arizona Proposition 116, Tax Exemptions for Business Equipment Amendment (2012)
10. Arizona Proposition 117, Property Tax Amendment (2012)
11. Arizona Proposition 204, Sales Tax Increase Initiative (2012)
12. Arizona Proposition 102, Agricultural Property Tax Exemption Amendment (1994)
13. Arizona Proposition 200, Tobacco Tax and Healthcare Initiative (1994)
14. Arizona Proposition 108, Two-Thirds Vote for Legislature to Increase Revenue Initiative (1992)
15. Arizona Proposition 200, Municipal Tax Revenue Amendment (1960)
16. Arizona Proposition 200, Property Appraisal and Taxation Initiative (1962)
17. Arizona Proposition 102, Inventory Tax Exemption Amendment (1964)
18. Arizona Proposition 108, State Revenue Commission Amendment (1984)
19. Arizona Proposition 103, Tax Exemption for Privately-Owned Airports Amendment (1980)
20. Arizona Proposition 106, Property Tax Limitations Amendment (1980)
21. Arizona Proposition 100, Veterans Tax Exemption Amendment (1968)
22. Arizona Proposition 100, Watercraft Tax Exemption Amendment (1966)
23. Arizona Proposition 101, Tax Exemptions Amendment (1968)
24. Arizona Proposition 100, Aircraft Tax Amendment (1964)
25. Arizona Proposition 102, Property Tax Exemption for Household Goods Amendment (1968)
26. Arizona Proposition 103, License Tax Amendment (1968)
27. Arizona Proposition 105, Distribution of Vehicle Tax Amendment (1974)
28. Arizona Proposition 300, Prohibition of Food Tax Amendment (1974)
29. Arizona Proposition 108, Motor Vehicle Taxes Amendment (1972)
30. Arizona Proposition 200, Urban Revenue Sharing Fund and Tax Initiative (1972)
31. Arizona Proposition 104, Vehicle and Gas Tax Revenues Amendment (1970)
32. Arizona Proposition 130, Property Tax Exemptions Amendment (2022)
33. Arizona Measure Nos. 102-103, Election of Members of the State Tax Commission Amendment (1920)
34. Arizona Measure Nos. 300-301, Distribution of Motor Fuel Tax Revenue Initiative (1946)
35. Arizona Measure Nos. 100-101, Better Roads Amendment (1952)
36. Arizona Measure Nos. 300-301, Division of Privilege Tax with Municipalities Initiaitve (1942)
37. Arizona Measure Nos. 110-111, Uniform Auto Tax Amendment (1940)
38. Arizona Measure Nos. 320-321, Property Taxation Initiative (1914)
39. Arizona Measure Nos. 106-107, Tax Exemptions for Public Corporations Amendment (1932)
40. Arizona Measure Nos. 304-305, State Highway Department Finance Initiative (1926)
41. Arizona Measure Nos. 304-305, Excise Tax for School Maintenance Initiative (September 1950)
42. Arizona Measure Nos. 310-311, Semi-Annual Taxes Initiative (1914)
43. Arizona Measure Nos. 102-103, Exemptions from Taxation Amendment (1916)
44. Arizona Measure Nos. 110-111, Automobile Tax Exemption Amendment (1930)
45. Arizona Measure Nos. 300-301, License Tax on Traveling Merchants Referendum (1928)
46. Arizona Measure Nos. 102-103, Property Tax Exemptions Amendment (1928)
47. Arizona Measure Nos. 104-105, Tax Free Homes Amendment (1938)
48. Arizona Measure Nos. 106-107, Property Tax Limitations Amendment (1940)
49. Arizona Measure Nos. 100-101, Tax Free Homes Amendment (1940)
50. Arizona Measure Nos. 108-109, Rights of Tax Levying Public Improvement Districts Amendment (1940)
51. Arizona Measure Nos. 110-111, Prohibit Inventory Tax Amendment (September 1950)
52. Arizona Measure Nos. 105-106, Method and Mode of Assessing, Equalizing, and Levying Taxes Amendment (1912)
53. Arizona Measure Nos. 100-101, Property Tax Amendment (May 1927)
54. Arizona Proposition 100, Property Tax Exemptions for Widows and Veterans Amendment (June 1980)
55. Arizona Proposition 101, Property Tax Exemptions for Widows Amendment (June 1980)
56. Arizona Proposition 102, Property Tax Exemptions for Disabled Persons Amendment (June 1980)
57. Arizona Proposition 103, Legislative Increases in Property Tax Exemptions Amendment (June 1980)
58. Arizona Proposition 104, Increase of Debt Limit on Taxable Property Amendment (June 1980)
59. Arizona Proposition 105, State Revenues Amendment (June 1980)
60. Arizona Proposition 106, Property Tax Limitations Amendment (June 1980)
61. Arizona Proposition 107, Limitations of Property Tax Increases Amendment (June 1980)
62. Arizona Proposition 108, Expenditure Limitations Amendment (June 1980)
63. Arizona Proposition 109, Expenditure Limitations for Schools and Colleges Amendment (June 1980)
64. Arizona Proposition 100, Prohibition of New Property Tax Amendment (2008)
65. Arizona Proposition 126, Prohibit New or Increased Taxes on Services Initiative (2018)
66. Arizona Proposition 310, Sales Tax for Fire District Funding Measure (2022)
67. Arizona Proposition 103, Urban Property Tax Exemption Amendment (1982)
68. Arizona Proposition 312, Property Tax Refund for Non-Enforcement of Public Nuisance Laws Measure (2024)

Recent news

The link below is to the most recent stories in a Google news search for the terms Arizona taxes. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

Tax policy in Arizona - Google News

See also

• Arizona
• Arizona state budget and finances
• Personal income tax
• Sales tax
• Corporate income tax
• Property tax

External links

• Tax Policy Center
• Federation of Tax Administrators
• Tax Foundation