How to Calculate Arizona State Income Tax

The state of Arizona has five different brackets for residents to use to calculate what they owe in income tax. Arizona's state tax rates are relatively low, but the state does tax individuals with higher earnings at steeper rates.

Things You'll Need

• Calculator
• Tax preparation professional (recommended)
• W-2 report or equivalent

Instructions

Figure out Your Arizona State Income Tax

1. Have your W-2 earnings statement, supplied by your employer, on hand when you sit down to calculate your Arizona state income tax. If you're self-employed or the owner of a business, you'll have to calculate your annual income for yourself. Be accurate and honest.

2. Total up all the income you have received throughout the year from all sources--work, capital gains, investments, inheritances, prizes, grants and bursaries.

3. Add up the total amount of the tax deductions for which you qualify. Everyone enjoys a basic federal deduction, but you may qualify for others, depending on your situation. This is particularly true of business owners and supporters of dependents.

4. Subtract the total amount of your tax deductions from your annual income. The figure you will be left with is your taxable income.

5. Figure out the tax bracket in which you fall. Arizona has five, running as follows: the lowest tax rate, 2.87 percent, is applied to incomes of approximately $10,000 or less. $10,000 to $25,000 in income pays tax at a 3.2-percent rate. If you made approximately $25,000 to $50,000, you will pay tax at a 3.74-percent rate. The $50,000 to $150,000 range is taxed at 4.72 percent, and people making more than $150,000 pay 5.04 percent.

6. Multiply your taxable income by the decimal representation of your percentage tax rate to calculate how much you owe to the state of Arizona. For example, suppose you earned $33,000 in taxable income to qualify for the 3.74-percent rate. You would then multiply 33,000 by 0.0374 to arrive at the amount of income tax you owe: $1,234.20.

7. Consult the Arizona Department of Revenue to stay abreast of any changes in state taxation rates and regulations (see Resources below).

Tips & Warnings

• The IRS will audit you if it has reason to believe you falsified your income information to avoid taxes. If you are found guilty of such a crime, you will face fines and a possible prison sentence.

Resources

• Tax information on the Arizona Department of Revenue website.