The new single-rate income tax system for individuals will lower taxes across the board, but especially for higher-income earners who pay the most.
By Russ Wiles || Arizona Republic
A tax cut for Arizonans is coming sooner than expected.
The state will adopt a 2.5% flat-rate income tax system starting with the 2023 tax year — one year earlier than planned — with Gov. Doug Ducey citing rising state revenues and improved financial strength for making the expedited change possible.
The new single-rate system for individuals will lower tax payments across the board but especially for higher-income earners. It also could make tax planning — though not necessarily tax-return preparation — a bit simpler.
On average, taxpayers will receive a 13% state-tax reduction, saving families $350 a year, according to the governor, but the size of the cuts will vary.
For example, a married couple filing jointly with taxable income of $500,000 a year likely would save around $2,165, said Ed Zollars, a certified public accountant at Thomas & Zollars in Phoenix.
But that drops to $725 for a couple in the $200,000 range and a mere $27 for married spouses with less than $54,000 in taxable income.
“It’s something, but it wouldn’t do much for a down payment on a car,” said Zollars of the latter figure. People lacking any taxable state income won’t benefit, he added.