Overview
Arizona has a unique approach to state income tax withholding. Rather than using tax brackets or a single flat rate applied to all employees, Arizona allows each employee to elect their own flat withholding percentage from a set of approved rates on Form A-4.
State Income Tax (SIT)
Arizona’s state income tax withholding is employee-driven. Each employee selects a flat percentage rate on their Form A-4 from a list of valid values: 0.0%, 0.5%, 1.0%, 1.5%, 2.0%, 2.5%, 3.0%, or 3.5%. If the employee does not submit a Form A-4, the default withholding rate of 2.0% is applied. Employees may also claim exemption from withholding using Form WEC if they meet certain criteria.
| Tax Structure | Employee-elected flat percentage |
| Valid Rates | 0%, 0.5%, 1.0%, 1.5%, 2.0%, 2.5%, 3.0%, 3.5% |
| Default Rate | 2.0% if no Form A-4 submitted |
| State Form | Form A-4 (or Form WEC for exemption) |
| Supplemental | Flat method only, matches elected rate |
Supplemental Wages
Arizona supports the following supplemental calculation methods. When using the flat method, the supplemental rate is Matches elected rate.
Employer State Unemployment Tax (SUTA)
Your assigned SUTA rate will be based on your company’s experience with unemployment claims. New employers typically start at the default rate of 2.0%.
| Tax Type | Employer-paid only |
| Default New Employer Rate | 2.0% |
| Rate Assignment | Experience-rated; assigned annually by the state |
Other Taxes & Obligations
Arizona does not currently impose significant additional state-level payroll taxes beyond SIT and SUTA. This keeps payroll relatively streamlined compared to states with multiple layers of tax obligations.
Disclaimer: This content is provided for general informational purposes only and does not constitute legal, tax, or accounting advice. Netchex does not provide tax or legal guidance and makes no representations regarding the accuracy or applicability of this information. Laws and regulations may change. The information on this page reflects payroll tax guidelines as of March 2026.
For the most current requirements, please refer to: Arizona Department of Revenue
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