Arizona State Income Tax Withholding Information

State Abbreviation:

AZ

State Tax Withholding State Code:

04

Basis For Withholding:

Based on state taxable wages

Acceptable Exemption Form:

A-4

Acceptable Exemption Data:

0.8, 1.8, 2.7, 3.6, 4.2, 5.1

TSP Deferred:

Yes

Special Coding:

Arizona state tax is based on a percentage of the Arizona State taxable wages. Determine the Total Number Of Allowances field as follows:

When a Form A-4 has not been filed, or an invalid status is found for an employee on the database, the employee's taxes will automatically be withheld at the higher 2.7%, regardless of his/her annual income. In order to elect a percentage less than or greater than 2.7%, employees must submit a Form A-4. The employee can submit a Form A-4 for a minimum withholding of 0.8% of the amount withheld for state income tax. An employee required to have 0.8% deducted may elect to increase this rate to 1.3%, 1.8%, 2.7%, 3.6%, 4.2%, or 5.1% by submitting a Form A-4. The $15,000 annual wages threshold has been removed. Employees can now elect any of the valid percentage rates regardless of annual compensation. Employees who have annual wages exceeding $15,000 who are currently claiming the 1.3% tax rate will have an automatic reduction in their state withholding rate from 1.8% to 1.3%. Employees with an exempt status will remain the same.

Note: Do not enter the decimal point when entering the percentage in the Total Number Of Allowances Claimed field. For Example: To enter 1.3 percent, type 013.

If Block 3 is checked on Form A-4, enter 0NL. No tax will be withheld due to total exemption eligibility.

Additional Information:

None

Additional Resources:

TAXES 11-23, Arizona State Income Tax Withholding

Withholding Formula (Effective Pay Period 12, 2011)

  1. Subtract the nontaxable biweekly Thrift Savings Plan contribution from the gross biweekly wages.
  2. Subtract the nontaxable biweekly Federal Health Benefits Plan payment(s) (includes dental and vision insurance program, and flexible spending account - health care and dependent care deductions) from the amount computed in Step 1.
  3. Add the taxable biweekly fringe benefits (taxable life insurance, etc.) to the amount computed in Step 2 to obtain the adjusted gross biweekly wages.
  4. Multiply the biweekly Arizona state taxable wages by 26 to obtain the annual Arizona State tax wages.
  5. Determine the annual Arizona income tax withholding by applying the following guideline.
    6. Multiply the Arizona State Taxable Wages by:
    0.8%
    1.3%1
    1.8%
    2.7%2
    3.6%
    4.2%
    5.1%
    1The $15,000 annual wage threshold has been removed. Employees who have annual wages exceeding $15,000 who are currently claiming the 1.3% tax rate will have an automatic reduction in their state withholding rate from 1.8% to 1.3%.
    2The default rate will be 2.7% when a valid Form A-4 is not on file or the employee does not submit one.
  6. Divide the annual Arizona income tax withholding by 26 to obtain the biweekly Arizona income tax withholding.