Arizona

Tax Rate Range: Low - 2.73%; High - 4.79%
Income Brackets: * Lowest - $10,000; Highest - $150,000
Personal Exemptions: Single - $2,100; Married - $4,200 with no
Standard Deduction Single: - $4,247; Married filing jointly - $8,494
Medical/Dental Deduction: Allows deductions for all qualified medical and dental expenses.
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security and Railroad Retirement benefits are exempt. Up to $2,500 total of military, civil service, and Arizona state/local government pensions are also exempt. All out-of-state government pensions are fully taxed. Frequently asked tax questions
Military Disability Retired Pay: Disability Portion - Length of Service Pay; Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless combat incurred. Retired Pay - Based solely on disability: Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless all pay based on disability and disability resulted from armed conflict, extra-hazardous service, simulated war, or an instrumentality of war.
VA Disability Dependency and Indemnity Compensation: Not subject to federal or state taxes
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.

Sales Taxes

State Sales Tax: 5.6% (food and prescription drugs exempt). All counties and some cities levy a sales tax that could bring the combined tax rate to 10.7%.
Gasoline Tax: 19 cents/gallon
Diesel Fuel Tax: 28 cents/gallon
Cigarette Tax: $2.00/pack of 20
Water Use Tax: 65 cents per 1,000 gallons of water used.

Property Taxes

There is no state property tax. Tax jurisdictions set tax rates, which may vary considerable from one area to another. Property tax is administered by county assessors. Single homeowners 65 and older who earn less than $3,700 and married couples who earn less than $5,500 are eligible for a tax credit of up to $502.
Persons at least 65 years old who have resided in their primary residence for at least two years and have total income not more than four times the Social Security supplemental security income (SSI) benefit rate may apply to the assessor by September 1 to have the valuation of the primary residents and up to 10 acres of adjoining undeveloped land frozen at the full cash value when the application is filed.
Arizona also taxes personal property, which is defined as all types of property except real estate. Taxable personal property includes property used for commercial, industrial and agricultural purposes. Personal property is considered to be movable and not permanently attached to real estate.
In lieu of a personal property tax on automobiles, the state imposes an annual motor vehicle license tax. The fee to register an automobile in Arizona is $8.00 (or $8.25 in metro Phoenix and Tucson, including a 25-cent air quality compliance sticker fee), plus an air quality research fee of $1.50 and a vehicle license tax (VLT). The VLT is based on an assessed value of 60% of the manufacturer's base retail price reduced by 16.25% for each year since the vehicle was first registered in Arizona. As of Dec 1, 2000, the rate is calculated at $2.80 for new vehicles or $2.89 for used ones for each $100 of the assessed value. For example, for a new vehicle that costs $25,000, the first year's assessed value would be $15,000 and the VLT would be $420. The second year the assessed value would be $12,562.00 and the VLT would be $363.06. Call 800-251-5866 for details.

Estate Taxes

There is no inheritance or gift tax and the estate tax does not apply to decedents whose date of death is on or after January 1, 2006.
For further information, visit the Arizona Department of Revenue site. For questions about moving to Arizona, click here. For other tax questions, call 602-255-3381.

* For joint returns, the taxes are twice the tax imposed on half the income.