Arizona state income tax brackets 20214/16/2024 ![]() ![]() "If our economy goes into a recession like a lot of people think, all these tax cuts are going to mean we’re going to have to cut the next time we see an economic downturn," he said. Lujan said state rosy revenues figures are inflated by federal pandemic spending. Arizona was among the states that had to make the biggest spending cuts after the Great Recession hit in late 2007. Republican Senate President Karen Fann called it "incredible news for the hardworking men and women of Arizona," who are dealing with inflation and a potential recession she blamed on government spending by congressional Democrats.īut the tax cuts could cut both ways if a recession hits. Revenue in the budget year that ended June 30 reached $16.7 billion, the most ever. The tax law said the full cut would go into effect if revenues yearly exceeded $12.9 billion. Republicans who steered the tax cuts through the Legislature last year also hailed the acceleration. But the state Supreme Court halted that effort in April, agreeing with business groups that tax legislation is not subject to the voter referendum process in the state constitution. Opponents of last year’s tax cut package, mainly backers of public education, collected enough signatures to block it from taking effect until a vote in November’s election. "This tax relief keeps Arizona competitive and preserves our reputation as a jobs magnet and generator of opportunity," he said in a statement. ![]() MORE: Arizona Supreme Court reinstates massive income tax cutsĭucey has mainly waived off the inequities in who benefits from the measure he signed last year, instead trumpeting the effects on the state’s economy, "A household with $70,000 a year gets a $58 annual tax cut." "If you’re making over half a million dollars a year, you get an average tax cut of over $16,000 annually," Lujan said. ![]() Those in the highest tax bracket will see their rate drop from 4.5% to 2.5%."These tax cut overwhelmingly benefit the richest Arizonans and do very little for middle- or low-income Arizonans," said David Lujan, President and CEO of the Children’s Action Alliance, a lobbying group that advocates for child welfare and education issues. According to the Arizona Center for Economic Progress, the lowest earners in the state may see an average yearly saving of $3. Everyone's tax rate will decrease, but it benefits the wealthy the most.įor example, those in the lowest tax bracket will see their rate drop from 2.59% to 2.5%. However, most people will not see that much tax relief. Both Arizonas tax brackets and the associated tax rates were last changed one year prior to 2021 in 2020. This means that these brackets applied to all income earned in 2020, and the tax return that uses these tax rates was due in April 2021. Ducey's office has promoted the plan, which they believe will save Arizonans, on average, around $300. This page shows s archived Arizona tax brackets for tax year 2020. “Essentially, what this is doing, is collapsing that into a 2.5% flat tax rate that everyone pays.”Īrizona's four tax brackets will be widdled down to one. So based on how much you make, that can put you into a higher tax bracket,” said Jenna Bentley, with the Goldwater Institute. The state most recently had a two-rate individual income tax system with rates of 2.55 and 2. ![]() “So currently, Arizona’s income tax is based on a tier system. The law, passed in 2021, allowed early implementation if the state hit certain economic thresholds. Arizona's 2.5% flat income tax will take effect on January 1, one year ahead of schedule. ![]()
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