State-by-State Guide to Taxes on Middle-Class Families
Tool | November 2020

Arizona State Tax Guide for Middle-Class Families

State tax rates and rules for income, sales, gas, property, cigarette, and other taxes that impact middle-class families.


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The Bottom Line
Flag of Arizona

Most Tax-Friendly

While the Grand Canyon State does have an income tax, the rates are notably low (and will get lower starting in 2022). There's 3.5% surtax imposed on taxable income over $500,000 for joint filers and over $250,000 for single taxpayers, but the overall tax rate (including the surtax) for those impacted by the surtax can't exceed 4.5%. Sales tax rates are high in Arizona, but at least property taxes and taxes on gasoline are on the low end.

Income Tax Range

Low: 2.59% (on up to $54,544 of taxable income for married filers and up to $27,272 for single filers)

High: 4.5% (on $327,263 and over of taxable income for married joint filers and $163,632 and over for single filers)

(Note: The dollar figures above are for the 2020 tax year, since the amounts for 2021 are not yet available.)

Starting in 2021, Arizona imposes a 3.5% surtax on taxable income over $500,000 for joint filers and over $250,000 for single taxpayers. However, the surtax can't increase the overall top rate above 4.5% (which effectively nullifies the surtax for the 2021 tax year). Also note that the surtax's constitutionality is being challenged in the courts.

Beginning in 2022, a two-bracket tax rate structure will be adopted. The rates will be 2.55% (on up to $54,544 of taxable income for joint filers and up to $27,272 for single filers) and 2.98% (on over $54,544 of taxable income for joint filers and on over $27,272 of taxable income for single filers). The rates will decrease to 2.53% and 2.75%, respectively, if certain state revenue amounts are reached. The state will then adopt a single flat rate of 2.5% if another state revenue amount is reached.

Sales Tax

5.6% state levy. Localities can add as much as 5.6% to that, but the average combined levy is 8.4%, according to the Tax Foundation.

Groceries: Exempt from state tax, but local taxes may apply
Clothing: Taxable
Motor Vehicles: Taxable
Prescription Drugs: Exempt

Real Property Taxes

In Arizona, the median property tax rate is $617 per $100,000 of assessed home value.

Motor Fuel Taxes

Gasoline: 19¢ per gallon.
Diesel: 27¢ per gallon (19¢ per gallon for light vehicles like pickup trucks).

Sin Taxes

Cigarettes: $2 per pack.
Snuff, fine-cut chewing and smoking tobacco: $0.23 per ounce
Plug or twist chewing tobacco: $0.06 per ounce
Cigars: $0.22 to $2.20 per ten cigars

Beer: $0.16 per gallon
Wine: $0.84 per gallon
Liquor: $3 per gallon

Marijuana: 16% excise tax, plus state and local sales tax

Annual Car Taxes and Fees

An annual vehicle license tax based on the car's sticker price (MSRP) and age is imposed.

Estate and Inheritance Taxes

No estate or inheritance tax.