Arizona State Taxes

Arizona Income Tax

For the 2023 tax year and beyond, the state will use a flat rate of 2.5% for income taxes. Non-residents and seasonal residents (part-time) must also use the flat tax rate.

Who Must File?

Residents and non-residents must file an individual income tax return if they receive income from sources within Arizona, such as wages, rental income, business income, real estate sales, or income from other Arizona sources.

The filing threshold is based on filing status and federal gross income (excluding non-taxable Arizona income):

• Single and gross income is more than $14,600;
• Married filing joint and gross income is more than $29,200;
• Married filing separate and gross income is more than $14,600; and
• Head of Household and gross income is more than $21,900.

Non-residents are subject to the same income thresholds but should file Form 140NR, Nonresident Personal Income Tax Return. To determine if the income threshold is met, non-residents should check out the guidance provided by the Arizona Department of Revenue here.  

Arizona Sales Tax

Arizona has a state sales tax rate (known as transaction privilege tax) of 5.6%. Each local government can also impose an additional sales tax of up to 5.6% for a total of 11.2%. The average local sales tax is 2.8%  and the average combined rate (state & city) is 8.4%. Tucson, for example, has a sales tax rate of 8.7% which consists of the state sales tax of 5.6%, Pima County sales tax of .5%, and the city’s tax of 2.6%. You can find a list of sales tax rates by city here.

Arizona Property Taxes

Property taxes in Arizona are assessed at the county level and the tax rate varies by county. For example, Greenlee County’s median property tax is only $351 annually, while residents in Coconino County average $1,922. Arizona’s median property tax is currently $1,786 per year. Overall, Arizona is ranked 31 out of 50 in the U.S. for the average amount of property taxes collected.

Arizona Property Tax

Highest	$1922
Median	$1786
Lowest	$351

Yearly Cost Per Resident

Arizona Tax Holidays

At this time, Arizona does not offer any tax holidays.

Arizona Tax Relief

If you’re struggling to pay your Arizona state taxes, you’re not alone. Whether your tax debt stems from unexpected financial hardship, unfiled returns, or a business tax issue, ignoring the problem can lead to additional penalties, interest, and collection actions. The sooner you address your tax debt, the more options you may have available.

Fortunately, there are several ways to resolve Arizona tax debt depending on your financial situation. From payment plans to tax settlement and other resolution options, taking action early can help you regain control of your finances and avoid more serious collection efforts.

Understanding how Arizona collects unpaid taxes and the relief options available to you is the first step toward resolving your tax issues.

Common Arizona State Tax Problems

How Arizona Collects Tax Debt

If you don’t pay your Arizona income tax bill by the due date, the Department of Revenue will typically send a series of notices explaining the amount you owe and request payment. These notices also provide information about your payment options and explain the potential consequences of failing to resolve your balance.

If your balance remains unpaid and the notices go unanswered, your account may be referred to the Arizona’s Department of Revenue’s Collections Department. At that point, the state may pursue enforced collection actions to recover the debt, including filing tax liens, garnishing wages, levying bank accounts, seizing certain assets, or intercepting state tax refunds.

Because penalties and interest continue to accrue until the balance is paid, addressing your tax debt as early as possible can help you avoid additional costs and more serious collection actions.

Taxpayer receives Balance Due Notice

Additional notices are sent requesting payment

If not paid, case referred to Collection Services Division

Arizona State Tax Relief Options

Arizona offers several state tax relief options, including:

• Income Tax Payment Plans – Payment plans are subject to review and may require submission of a financial statement. Depending on the amount owed and the length of the payment plan, a tax lien may be filed.
• Penalty Abatement – The state may abate penalties for reasonable cause. An abatement request can be made by filing Arizona Form 290.
• Offer in Compromise – Taxpayers who have limited or no income may be able to settle their tax debt for less through an Offer in Compromise.

If you’re experiencing financial hardship and can’t pay your Arizona tax bill, contact the Arizona Department of Revenue as soon as possible to discuss payment options and potential alternatives to collection actions.

When to Seek Tax Relief Help

If you’re experiencing any of the following, it may be time to explore your tax relief options:

The sooner you address your tax debt, the more options you may have available to resolve your balance and minimize additional collection actions.

Arizona Tax Relief FAQs

How do I set up an Arizona payment plan?

If you’re unable to pay your Arizona tax bill in full, you may be eligible to set up a monthly payment plan through AZTaxes.gov. Simply log in, navigate to the Individual menu, and select Request a Payment Plan to begin the process. Before enrolling, be sure to review the program’s terms and conditions to understand your payment obligations.

What happens if I ignore Arizona tax notices?

Ignoring notices from the Arizona Department of Revenue can result in additional penalties and interest, and your account may eventually be referred to Collections. Once that happens, the state may pursue collection actions such as wage garnishments, bank levies, tax liens, or other methods allowed by law. Responding to notices as early as possible can help you avoid more serious enforcement actions.

Can Arizona garnish my wages for unpaid taxes?

Yes. If you have unpaid Arizona tax debt and do not make arrangements to resolve it, the Arizona Department of Revenue may garnish your wages to collect the balance you owe. Wage garnishment allows a portion of your paycheck to be withheld until the tax debt is paid or another resolution is reached.

Can Arizona levy my bank account?

Yes. In certain situations, the Arizona Department of Revenue may levy your bank account to collect unpaid state taxes. A bank levy allows the state to seize funds from your account to satisfy your outstanding tax debt. Acting quickly after receiving collection notices may help you avoid this type of enforcement action.

How long does Arizona have to collect unpaid taxes?

In most cases, the Arizona Department of Revenue has 10 years to collect unpaid state taxes after the tax liability becomes final. However, certain circumstances—such as a written agreement to extend the collection period, a collection lawsuit, or a legal stay of collection activity—may extend this timeframe. If you have questions about an older Arizona tax debt, it’s best to review your specific situation with the Arizona Department of Revenue or a qualified tax professional.

Arizona Tax Resources

If you need assistance preparing your Arizona state taxes, you can speak with a tax professional from Tax Defense Network by calling 855-476-6920.

You can also visit the Arizona Department of Revenue website for additional resources.

• Individual Income Tax Forms
• Arizona Check Refund Status portal
• DOR Customer Service 602-255-3381 or 800-352-4090
• Property Tax Questions 602-716-6843
• AZ Taxes website – make or cancel a tax payment