Arizona — Personal Income Tax

Arizona imposes a personal income tax on the entire taxable income of every Arizona resident and on the entire taxable income of every nonresident that is derived from sources within Arizona. A "resident" includes every individual in Arizona for other than a temporary or transitory purpose, every individual domiciled in Arizona who is outside the state temporarily, and every individual who spends more than nine months of the taxable year in Arizona (rebuttable by showing a temporary or transitory purpose). A "nonresident" means every individual other than a resident. Residents are taxed on all income regardless of source; nonresidents are taxed only on Arizona-source income.

Source: A.R.S. § 43-1011; A.R.S. § 43-104

Arizona imposes a flat personal income tax rate of 2.5 percent on the taxable income of residents and nonresidents. This flat rate replaced Arizona's previous graduated rate structure and became effective for taxable years beginning on or after December 31, 2022 (tax year 2023). The 2.5 percent rate applies uniformly to all levels of taxable income and to all filing statuses—single, married filing jointly, married filing separately, and head of household. The flat tax took effect after the Arizona General Fund met statutory revenue thresholds established by the legislature in 2021; those thresholds were met in September 2022, triggering implementation of the 2.5 percent rate for the 2023 tax year and thereafter.

Arizona may further reduce the individual income tax rate in future years based on structural budget surpluses, as authorized by separate legislation that directs the Department of Revenue to reduce the rate when specified revenue conditions are met. However, as of tax year 2023 through the present, the operative rate remains 2.5 percent.

Source: A.R.S. § 43-1011

Arizona individual income tax returns made on a calendar year basis are due on or before April 15 following the close of the calendar year. Returns made on a fiscal year basis are due on or before the fifteenth day of the fourth month following the close of the fiscal year. Taxpayers granted a federal extension of time to file are automatically granted the same extension for Arizona if at least 90 percent of the tax liability has been paid; the extension may not exceed six months from the initial due date.

Source: A.R.S. § 43-325; A.R.S. § 42-1107

Arizona allows taxpayers to elect a standard deduction in lieu of itemized deductions. The statute establishes base amounts of $12,200 for single or married filing separately, $18,350 for head of household, and $24,400 for married filing jointly. These base amounts are adjusted annually for inflation beginning with taxable years after December 31, 2019, using the same methodology as the federal basic standard deduction under Internal Revenue Code section 63. Practitioners should consult the Department of Revenue's annual forms and instructions for the current inflation-adjusted amounts.

Source: A.R.S. § 43-1041

Arizona allows exemptions that reduce taxable income for qualifying taxpayers. A $1,500 exemption is allowed for a blind taxpayer (central visual acuity not exceeding 20/200 in the better eye with correcting lenses, or visual acuity greater than 20/200 accompanied by a field of vision limitation not exceeding twenty degrees). A taxpayer who has attained age 65 before the close of the taxable year may claim a $2,100 exemption if not claimed as a dependent by another taxpayer. A $2,300 exemption is allowed for each person age 65 or older if the taxpayer pays more than one-fourth of the cost of maintaining that person in a nursing care institution, residential care institution, or assisted living facility licensed under Arizona law. A $2,300 exemption is also allowed for each stillborn child (only in the year of stillbirth) if a certificate of birth resulting in stillbirth has been issued. A resident taxpayer may claim a $10,000 exemption for each parent or ancestor of a parent age 65 or older who requires assistance with activities of daily living, lives in the taxpayer's principal residence for the entire taxable year, and for whom the taxpayer pays more than one-half of total support and maintenance costs.

Dependent exemption eliminated; replaced by dependent tax credit. Prior to tax year 2019, Arizona allowed a $2,300 exemption for each dependent as defined in A.R.S. § 43-1001 (which adopts the Internal Revenue Code § 152 definition incorporating qualifying children and qualifying relatives). Beginning with tax year 2019, Arizona eliminated the $2,300 dependent exemption and replaced it with a nonrefundable dependent tax credit. The credit amount is $100 for each dependent under age 17 and $25 for each dependent age 17 or older, subject to phaseout for taxpayers with federal adjusted gross income exceeding $200,000 (single, married filing separately, or head of household) or $400,000 (married filing jointly). The dependent definition for purposes of the credit remains the IRC § 152 definition incorporated by reference in A.R.S. § 43-1001(3). Taxpayers must provide dependent information on the front of Arizona Forms 140, 140A, or 140PY to claim the credit. See the "Definition of 'dependent' for Arizona personal exemptions and credits" section of this guide for the detailed dependent definition and IRC § 152 conformity framework.

Source: A.R.S. § 43-1023; A.R.S. § 43-1001

Nonresidents are taxed only on income from sources within Arizona. Arizona statutory law defines "income derived from or attributable to sources within this state" to include income from tangible or intangible property located or having a situs in Arizona and income from any activities carried on in Arizona, regardless of whether carried on in intrastate, interstate, or foreign commerce.

The Arizona Administrative Code regulation R15-2C-601 provides detailed sourcing rules for specific income categories:

Wages and salary. Nonresident employees who are employed continuously in Arizona for a definite portion of the taxable year include in Arizona-source income the total compensation for the period employed in Arizona. Nonresident employees employed in Arizona at intervals throughout the year (e.g., operating trains, boats, planes, motor buses, or trucks between Arizona and other states) apportion their compensation based on the ratio of working time or mileage in Arizona to total working time or mileage. Nonresident professional service providers (attorneys, physicians, accountants, engineers) and entertainers (actors, singers, performers, wrestlers, boxers) must include in Arizona-source income the entire amount of fees or compensation for services performed in Arizona, even if not regularly engaged in carrying on their profession or business in Arizona.

Real and tangible personal property. Income of a nonresident from sources within Arizona includes rents from real or tangible personal property in Arizona, gains realized from the sale or transfer of such property (regardless of where the sale or transfer is consummated), and any other type of income derived from the ownership, control, or management of real and tangible personal property located in Arizona, irrespective of whether a trade, business, or profession is carried on within the state.

Business, trade, or profession conducted partially in Arizona. If a nonresident's business, trade, or profession is carried on entirely outside Arizona, no portion of gross income from that activity is Arizona-source income. Conversely, if conducted wholly within Arizona, the entire gross income must be reported. If carried on both within and without Arizona, the nonresident must apportion income using statutory formulas based on the ratio of property, payroll, and sales within Arizona to total property, payroll, and sales everywhere.

Disaster recovery exemption. Income of a nonresident from wages or salary received by the nonresident employee who is in Arizona on a temporary basis for the purpose of performing disaster recovery from a declared disaster during a disaster period as defined in A.R.S. § 42-1130 is not considered Arizona-source income. A similar exemption applies to income earned by a nonresident who is a sole owner of a qualifying out-of-state business from performing qualified disaster recovery work during a disaster period.

Source: A.R.S. § 43-1091; A.R.S. § 43-104; A.A.C. R15-2C-601

An individual who moves into or out of Arizona during the tax year with the intent of establishing or abandoning Arizona residency is treated as a part-year resident and must file Arizona Form 140PY. Arizona does not define "part-year resident" as a distinct category in the statutes; instead, A.R.S. § 43-1097 addresses the tax year in which a taxpayer "changes" residency status, and the Department of Revenue operationally treats such individuals as part-year residents for filing purposes.

Moving out of Arizona (resident to nonresident). During the tax year in which a taxpayer changes from a resident to a nonresident, Arizona taxable income includes (1) all income and deductions realized or recognized during the period the individual was a resident (depending on the taxpayer's method of accounting), plus any income accrued by a cash-basis taxpayer prior to becoming a nonresident, and (2) all income and deductions earned in Arizona or derived from Arizona sources after the taxpayer became a nonresident.

Moving into Arizona (nonresident to resident). During the tax year in which a taxpayer changes from a nonresident to a resident, Arizona taxable income includes (1) all income and deductions realized or recognized during the period the individual was a resident (depending on the taxpayer's method of accounting), except any income accrued by a cash-basis taxpayer prior to becoming a resident, and (2) all income and deductions earned in Arizona or derived from Arizona sources prior to the time the taxpayer became a resident.

In both scenarios, the part-year resident's Arizona taxable income combines two distinct pieces: income from the entire period of Arizona residency (all-source income as a resident), plus Arizona-source income from the portion of the year when the individual was a nonresident of Arizona. Pension income, for example, is taxed only on the portion received during the period of Arizona residency. The Department of Revenue confirms that part-year residents report all income earned while an Arizona resident, including retirement income from another state, and any income earned from an Arizona source before moving to (or after leaving) Arizona.

Form 140PY. Part-year residents must use Form 140PY (Part-Year Resident Personal Income Tax Return) to file their Arizona return. The form requires the taxpayer to report federal adjusted gross income for the full year, then allocate income and deductions between the resident and nonresident portions of the year, applying the allocation rules in A.R.S. § 43-1097. Full-year residents use Form 140, 140A, or 140EZ; nonresidents with Arizona-source income use Form 140NR.

Standard deduction and exemptions. Full-year and part-year residents use the same filing thresholds and may claim the same standard deduction amounts without proration. Nonresidents, by contrast, must prorate exemptions and the standard deduction based on the ratio of Arizona gross income to federal adjusted gross income.

Source: A.R.S. § 43-1097; Arizona Department of Revenue, Determining Filing Status for Nonresidents and Part-Year Residents; Form 140PY Booklet for 2025

Arizona law requires a full-year or part-year resident individual to file a personal income tax return if the individual's gross income for the taxable year exceeds the amount of the standard deduction allowed under A.R.S. § 43-1041 as adjusted for inflation. A nonresident individual must file a return if the individual's gross income exceeds the standard deduction amount for a full-year or part-year resident multiplied by the percentage that the individual's Arizona gross income is of the individual's federal adjusted gross income.

Full-year and part-year resident filing thresholds for 2025. For the 2025 tax year, a full-year or part-year resident must file an Arizona income tax return if gross income exceeds the inflation-adjusted standard deduction amount. The Department of Revenue's 2025 Form 140EZ instructions confirm the following standard deduction amounts (which serve as the filing thresholds):

• Single or married filing separately: $15,750
• Married filing jointly: $31,500
• Head of household: $23,625 (inflation-adjusted amount for 2025)

These amounts equal the inflation-adjusted standard deduction for the 2025 tax year. The standard deduction base amounts are set by A.R.S. § 43-1041(A) at $12,200 for single or married filing separately, $24,400 for married filing jointly, and $18,350 for head of household, and A.R.S. § 43-1041(H) requires the Department of Revenue to adjust these amounts annually for inflation in the same manner as the federal basic standard deduction under Internal Revenue Code section 63.

Nonresident filing thresholds. A nonresident's filing threshold is the applicable full-year resident threshold (based on filing status) multiplied by the ratio of the nonresident's Arizona gross income to federal adjusted gross income. For example, if a single nonresident has $50,000 of federal adjusted gross income and $10,000 of Arizona-source income, the Arizona income ratio is 20% ($10,000 ÷ $50,000), and the filing threshold is $3,150 ($15,750 × 20%). If the nonresident's gross income exceeds the prorated threshold, the nonresident must file Form 140NR. The proration formula is set forth in A.R.S. § 43-301(B).

Part-year resident treatment. Part-year residents use the same filing thresholds as full-year residents without proration. A.R.S. § 43-301(A) requires a "full-year or part-year resident individual" to file if gross income exceeds the standard deduction amount, without distinguishing between the two categories for threshold purposes. Part-year residents file Form 140PY if they meet the threshold based on their filing status.

Definition of "gross income" for filing purposes. For purposes of determining whether an individual must file, "gross income" is defined by A.R.S. § 43-308 as gross income as defined in the Internal Revenue Code minus income included in gross income but excluded from taxation under Arizona law. The filing requirement applies regardless of whether the individual is required to file a federal return or has any federal adjusted gross income for the taxable year.

Source: A.R.S. § 43-301; A.R.S. § 43-1041; A.R.S. § 43-308; Arizona Form 140EZ Instructions for 2025

Arizona defines "dependent" by reference to the federal Internal Revenue Code rather than creating a separate state-specific definition. Under A.R.S. § 43-1001(3), the term "dependent" has the same meaning prescribed by Internal Revenue Code section 152. This federal conformity approach means that Arizona adopts the IRC's two-category framework: a "dependent" is either a "qualifying child" under IRC § 152(c) or a "qualifying relative" under IRC § 152(d), each with distinct relationship, residency, support, and income tests.

Application to personal exemptions (tax years prior to 2019). For tax years before 2019, Arizona allowed a $2,300 exemption for each dependent as defined in A.R.S. § 43-1001 and subject to the qualifications prescribed by IRC § 151(c). Because Arizona's dependent definition tracked the IRC § 152 definition, a taxpayer could claim the Arizona exemption for any individual who met the federal qualifying-child or qualifying-relative tests, even though the federal Tax Cuts and Jobs Act of 2017 suspended federal personal and dependency exemptions for tax years 2018 through 2025. Arizona continued to allow the $2,300 state exemption during this period because A.R.S. § 43-1023 independently authorized the deduction; the federal suspension of the exemption amount did not alter the underlying IRC § 152 definition of who qualifies as a dependent.

Replacement with dependent tax credit (tax year 2019 and after). Beginning with tax year 2019, Arizona eliminated the $2,300 dependent exemption and replaced it with a dependent tax credit. The credit amount is $100 for each dependent under age 17 and $25 for each dependent age 17 or older. The credit is subject to phaseout for taxpayers with federal adjusted gross income exceeding $200,000 (single, married filing separately, or head of household) or $400,000 (married filing jointly). The dependent definition for purposes of the credit remains the IRC § 152 definition incorporated by reference in A.R.S. § 43-1001(3). Taxpayers must provide dependent information—names, Social Security numbers, relationships, and months lived in the home—on the front of Arizona Forms 140, 140A, or 140PY (or the dependent section of Forms 140PTC or 140X) to claim the credit.

Federal conformity updates. Arizona periodically updates its conformity to the Internal Revenue Code through legislation. As of 2023, Arizona conforms to the IRC as amended and in effect for the relevant tax year, including amendments to the IRC § 152 dependent definition. Because A.R.S. § 43-1001(3) incorporates the IRC § 152 definition by reference without creating Arizona-specific exceptions, changes to the federal definition of "qualifying child" or "qualifying relative" automatically apply for Arizona purposes in the conformity year, unless Arizona enacts a specific addition or subtraction to address nonconformity.

Source: A.R.S. § 43-1001; A.R.S. § 43-1023; Arizona Department of Revenue, Deductions and Exemptions

Arizona uses federal adjusted gross income as the starting point for computing Arizona taxable income. Under A.R.S. § 43-1001(2), "Arizona gross income" of a resident individual means the individual's federal adjusted gross income for the taxable year, computed pursuant to the Internal Revenue Code. For nonresidents, A.R.S. § 43-1091(A) provides that Arizona gross income includes only that portion of federal adjusted gross income that represents income from sources within Arizona. After determining Arizona gross income, taxpayers make certain statutory additions and subtractions under A.R.S. §§ 43-1021 and 43-1022 to arrive at Arizona adjusted gross income, and then apply deductions under article 4 of chapter 10 to determine Arizona taxable income.

Conformity date to the Internal Revenue Code. Arizona's conformity to the Internal Revenue Code is established by A.R.S. § 43-105, which the Arizona legislature typically updates each year to conform to federal tax law changes enacted in the prior calendar year. The conformity statute sets different IRC "snapshots" for different tax years, requiring Arizona taxpayers to use the version of the Internal Revenue Code in effect as of a specific date for computing their tax liability for that year.

For tax years beginning from and after December 31, 2024 (tax year 2025 and later), A.R.S. § 43-105(A) defines "internal revenue code" as the United States Internal Revenue Code of 1986, as amended, in effect on January 1, 2025, including those provisions that became effective during 2024 with the specific adoption of all retroactive effective dates, but excluding any changes to the code enacted after January 1, 2025.

For tax years beginning from and after December 31, 2023 through December 31, 2024 (tax year 2024), the IRC means the Internal Revenue Code as in effect on January 1, 2024, including provisions that became effective during 2023 with retroactive dates, and including provisions that are retroactively effective during that tax year.

For tax years beginning from and after December 31, 2022 through December 31, 2023 (tax year 2023), the IRC means the Internal Revenue Code as in effect on January 1, 2023, including provisions that became effective during 2022 with retroactive dates, and including provisions that are retroactively effective during that tax year.

For tax years beginning from and after December 31, 2021 through December 31, 2022 (tax year 2022), the IRC means the Internal Revenue Code as in effect on January 1, 2022, including provisions that became effective during 2021 with retroactive dates, and additionally including provisions of the CHIPS and Science Act of 2022 (P.L. 117-167), the Inflation Reduction Act of 2022 (P.L. 117-169), and the Consolidated Appropriations Act, 2023 (P.L. 117-328) that are retroactively effective during tax years beginning from and after December 31, 2021 through December 31, 2022.

Rolling versus static conformity; annual legislative action. Arizona's approach is often described as "static" or "fixed-date" conformity because Arizona conforms to the IRC as of a specific January 1 date for each tax year, rather than adopting a "rolling" conformity that automatically incorporates all future federal changes. Each year the Arizona legislature considers whether to amend A.R.S. § 43-105 to conform to federal changes enacted during the prior year. If the legislature does not enact conformity legislation for a particular year, Arizona taxpayers must compute their Arizona tax liability using the last conformity date enacted, potentially creating significant differences from federal adjusted gross income and requiring additional state-specific adjustments. The Department of Revenue publishes updates on its Conformity to IRC webpage when conformity legislation is enacted.

Practical impact on taxpayers. Because Arizona gross income starts with federal adjusted gross income computed under the IRC as defined by A.R.S. § 43-105, a taxpayer must first complete a federal income tax return using the applicable IRC version, determine federal adjusted gross income, and then use that amount as the starting point for the Arizona return. Arizona-specific additions and subtractions are then applied to reflect items where Arizona does not conform to specific federal provisions (such as certain depreciation rules, deductions, or income exclusions). The Arizona standard deduction, personal exemptions, and tax credits are applied after Arizona adjusted gross income is determined. The conformity date determines which federal law definitions, exclusions, income recognition rules, and deduction provisions apply when computing federal adjusted gross income and therefore Arizona gross income.

Source: A.R.S. § 43-1001; A.R.S. § 43-1091; A.R.S. § 43-105; Arizona Department of Revenue, Conformity to IRC