Arizona Income Tax Calculator
At 2.5%, Arizona has one of the lowest flat state tax rates in the country — paired with a dependent tax credit instead of an exemption and a 25% capital gains exclusion. This take-home pay calculator covers federal tax, Arizona’s flat rate, and FICA in one place.
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How Arizona Income Tax Actually Works
Arizona collapsed its old six-bracket graduated system (2.59% to 4.5%) into a single flat 2.5% rate beginning with the 2023 tax year — and it’s stayed there since, making Arizona one of the lowest flat-rate income tax states in the country, trailing only North Dakota and a small handful of others. The Arizona standard deduction currently mirrors the federal amount ($15,750 single/MFS, $23,625 head of household, $31,500 married filing jointly for 2025), and Arizona lets you choose the standard deduction or itemize independently of whatever you chose on your federal return — a flexibility not every state offers.
Arizona eliminated personal exemptions back in 2019 and replaced them with a Dependent Tax Credit instead: $100 per dependent under age 17, and $25 for each dependent age 17 or older. Because this is a credit rather than a deduction, it reduces your tax bill dollar-for-dollar rather than just shrinking your taxable income — modest in size, but structurally more valuable per dollar than a comparable exemption would be.
The detail investors specifically should know: Arizona taxes capital gains as ordinary income at the flat 2.5% rate, but allows a 25% subtraction on long-term capital gains recognized on assets acquired after 2011 — which effectively brings the real long-term capital gains rate down to roughly 1.875%. Arizona is also unusually generous to non-itemizers: taxpayers who take the standard deduction can still increase it by 34% of their qualified charitable contributions for 2025, a benefit most states reserve only for itemizers. On top of all this, Arizona fully exempts Social Security benefits and both active-duty and retired military pay from state tax, and offers an additional age-65 standard deduction of up to $6,000 (income-limited) for the 2025 through 2028 tax years.
Frequently Asked Questions
Arizona applies a flat 2.5% rate to taxable income for every resident, regardless of income level or filing status. It has used this single rate since the 2023 tax year, replacing a graduated system that previously ranged from 2.59% to 4.5%, making it one of the lowest flat-tax rates in the country.
No personal exemptions since 2019. Instead, Arizona offers a Dependent Tax Credit of $100 per dependent under age 17 and $25 per dependent age 17 or older, which is a dollar-for-dollar reduction in tax owed rather than a deduction from income.
Arizona taxes capital gains as ordinary income at the flat 2.5% rate, but allows a 25% subtraction on long-term capital gains recognized after 2011, which effectively reduces the real long-term capital gains rate to about 1.875%.
No. Arizona does not tax Social Security benefits, and it fully exempts both active-duty military pay and military retirement pay from state income tax.
Yes. Arizona allows taxpayers who claim the standard deduction (rather than itemizing) to increase it by 34% of their qualified charitable contributions for the 2025 tax year, an unusual benefit most states do not offer non-itemizers.
No. Arizona does not permit any city, county, or local government to levy an income tax, so the flat 2.5% state rate is the entire income-tax picture.
Methodology: Calculations use Arizona’s 2025 flat 2.5% Personal Income Tax rate, the 2025 standard deduction ($15,750 single/MFS, $23,625 HOH, $31,500 MFJ), the Dependent Tax Credit ($100 under 17 / $25 other dependents), the 25% long-term capital gains subtraction, the income-limited age-65 additional standard deduction (up to $6,000), the 2025 IRS federal tax brackets and Child Tax Credit rules, and 2025 Social Security (6.2% to the $176,100 wage base) and Medicare (1.45% + 0.9% additional Medicare tax) rates, per Arizona Department of Revenue and IRS.gov guidance. Arizona permits no local income tax. This tool provides estimates for planning purposes only and is not tax, legal, or financial advice. Last reviewed for accuracy: June 2026.