Most Arizona residents will see a slight decrease in their income taxes next year. That’s thanks to the recent agreement between Gov. Doug Ducy and members of the state legislature.
Most middle class workers will save between 20 and 70 cents for every $1,000 earned. The reduction is due to a number of adjustments made to the state tax code in an effort to help it better align with the federal tax code. Arizona was one of several states that found itself at odds with federal tax reform following the implementation of President Donald Trump’s tax cuts in 2017.
Patty Gannon, senior manager of Communications at the Arizona Society of CPAs said in a release that "Arizona requires taxpayers to use their Federally Adjusted Gross Income as the starting point for state income tax assessment. ...the political challenges associated with conforming to the changes made by the Tax Cuts and Jobs Act of 2017 stalled legislative efforts to address conformity in a timely manner, leaving taxpayers and tax practitioners with more questions than answers as tax returns are prepared.”
Arizona lawmakers passed legislation to conform the state tax code with the federal one, leading to lower rates. Workers making $10,601-$26,500 are now paying 2.88 percent in income taxes. They’ll receive the biggest break as, under the new law, they’ll be paying 2.59 percent in taxes. This means that for every $1,000 earned, workers will pay $2.90 less in taxes in 2019.
Other earners in the state will see a tax break as well. Workers earning between $26,501 and $53,000 will now pay 3.34 percent in income taxes, down from 3.36 percent. Earners making between $53,001 and $159,000 will now pay 4.17 percent in taxes, down from 4.24 percent. Residents making $159,001 and over will now pay 4.50 percent in taxes, down from 4.54 percent.
Other new tax changes eliminates some base exemptions, including the personal exemption.