2.5% Flat Tax
Arizona has the LOWEST flat income tax rate in the entire United States!
Calculate Your Arizona State Tax
Arizona's Champion 2.5% Tax Rate
Arizona has the lowest flat income tax rate in the entire United States at 2.5%. Among states that have an income tax, Arizona beats everyone. Only 9 states have no income tax at all—among the other 41 states, Arizona's 2.5% is unbeatable.
- Lowest flat tax rate in America (2.5%)
- Simple calculation (multiply by 2.5%)
- No local city income taxes
- Standard deductions reduce taxable income
- Effective rate for most people: 2-2.3%
Real Example: $75,000 Income
Single Filer:
- Gross Income: $75,000
- Standard Deduction: -$13,850
- Taxable Income: $61,150
- Tax: $61,150 × 2.5% = $1,529
- Effective Rate: 2.04%
Married Filing Jointly:
- Gross Income: $75,000
- Standard Deduction: -$27,700
- Taxable Income: $47,300
- Tax: $47,300 × 2.5% = $1,183
- Effective Rate: 1.58%
That's incredibly low! Compare to California (~$4,000) or Oregon (~$5,600) on the same income.
How Arizona Compares to ALL States
| State | Tax Rate | Tax on $75k | AZ Savings |
|---|---|---|---|
| Arizona | 2.5% flat | $1,529 | — |
| No-Tax States (FL, TN, TX, WA, NV, etc.) | 0% | $0 | They save $1,529 |
| Indiana | 3% flat | ~$2,250 | AZ saves $721 |
| Pennsylvania | 3.07% flat | $2,303 | AZ saves $774 |
| Louisiana | 3% flat | ~$1,890 | AZ saves $361 |
| Michigan | 4.25% flat | $2,950 | AZ saves $1,421 |
| North Carolina | 4.25% flat | $2,646 | AZ saves $1,117 |
| Georgia | 5.19% flat | $3,270 | AZ saves $1,741 |
| California | Up to 12.3% | ~$4,000 | AZ saves $2,471 |
| Oregon | Up to 9.9% | ~$5,600 | AZ saves $4,071 |
20-Year Savings vs California:
Annual savings: $2,471
20-year savings: $49,420
That's a down payment on a house or a fully-funded retirement account!
Arizona Retirement-Friendly
- Social Security: 100% tax-free
- 401k/IRA Withdrawals: Only 2.5%!
- Pension Income: Only 2.5%!
- Warm weather year-round
- Low cost of living (outside Scottsdale/Paradise Valley)
Arizona is one of the BEST states for retirement. Only 2.5% tax on retirement withdrawals is exceptional. Compare to California (up to 12.3%), Oregon (up to 9.9%), or even Massachusetts (5%).
Best Places to Live in Arizona
For Income $30,000 - $50,000
Recommended: Tucson, Casa Grande, Yuma, Flagstaff
Why: Affordable living, 2.5% tax maximizes every dollar
Tax Impact: $600-$1,000/year state tax (incredibly low)
For Income $50,000 - $100,000
Recommended: Gilbert, Chandler, Peoria, Surprise, Queen Creek
Why: Family-friendly, excellent schools, Phoenix metro jobs, low tax
Tax Impact: $1,000-$2,200/year (vs $3,000-6,000 in high-tax states)
For Income $100,000 - $200,000
Recommended: Scottsdale, Tempe, North Phoenix, Anthem
Why: Great schools, tech jobs (Intel, etc.), 2.5% tax amplifies high income
Tax Impact: $2,200-$4,600/year (vs $7,000-15,000 in CA/OR/NY)
For Income $200,000+
Recommended: Paradise Valley, North Scottsdale, Fountain Hills
Why: Luxury living, 2.5% tax = massive savings
Tax Savings: On $300k, AZ charges $6,975 vs CA ~$25,000 (save $18,025/year!)
When Moving to Arizona Makes Sense
- You're moving from ANY state with income tax higher than 2.5% (almost all of them!)
- You work in tech (Intel, semiconductor industry, growing tech scene)
- You're retiring (2.5% on retirement income + warm weather)
- You work remotely for a high-tax state company (instant raise!)
- You want low taxes + Sun Belt lifestyle
- You're a snowbird or want to escape winter
- You value low cost of living + low taxes
- Very hot summers (110°F+ in Phoenix)
- Sales tax is moderate (5.6% state + local, total 7-10%)
- Property taxes exist (but moderate, ~0.7%)
- Some areas have lower-rated public schools (research districts)
Arizona's Tax Reform Success
Arizona transitioned to the 2.5% flat rate as part of a strategic plan to attract businesses and residents from California, Oregon, and other high-tax states. The strategy is working:
- Intel expanding semiconductor manufacturing in Arizona
- TSMC building $40 billion chip plant in Phoenix
- Remote California tech workers moving to Arizona in droves
- Retirees choosing Arizona over high-tax states
💡 The California Exodus: Many Californians are moving to Arizona. On a $150k income, moving from LA to Phoenix saves ~$10,000+/year in state tax alone. Add in lower housing costs, and the savings are enormous.
Tax Filing in Arizona
Arizona's simple 2.5% flat tax is easy to file:
- Cash App Taxes - FREE
- FreeTaxUSA - $14.99 AZ state
- VITA - FREE (income under $64,000)
State rankings: Lowest Tax States 2025 | Best States for Retirees | States with Flat Tax | Highest Tax States 2025
Related Resources
- California Tax Calculator - Compare AZ vs CA
- All State Tax Calculators
- States With Flat Tax