![]() ![]() When Arizona legislators voted to lower the tax rate as part of HB2900 and SB1828 in 2021, they anticipated moving to a 2.5% rate in tax year 2024. ( Note: Utah’s individual state income tax rate is 4.65% for tax year 2023) Of states with an individual income tax, Arizona has the lowest rate arguably, this makes Arizona one of the most attractive states for taxpayers. A 2.5% income tax rate is also a modest burden on taxpayers, and while there is still room to reduce it further, it allows Arizonans to keep more of their money in their pockets. A larger population can fill employment shortages, increase state revenues without increasing taxes, and give the state more influence on a national level. ![]() This encourages people to move to the state, bringing their sales and property tax revenue, capital and skills with them. This provides both economic and human capital to the state bringing both financial and social advantages.īeginning in tax year 2023, Arizona will have a 2.5% individual tax rate.Īrizona has a competitive advantage over almost all its surrounding states (except for Nevada which has no income tax). A flat tax rate encourages high-earning individuals to relocate to the state with the assurance that they will not be penalized for their higher earnings. ![]() It also does not dissuade taxpayers from increasing their incomes and potentially being pushed to a higher tax bracket. It makes filing taxes easier and makes tax cuts more equitable. A flat tax comes with advantages to both government and taxpayers. With similar budgets and revenues, Utah and Arizona have a lot they could learn from each other, making this a worthwhile point of study.Īrizona has implemented a flat tax rate for tax year 2023 and moving forward, joining Utah as one of the 11 states with a flat tax. In anticipation of Arizona’s Governor Ducey speaking at our Taxes Now Conference on May 8 th, and in light of the state’s 2.5% individual income tax rate, it is worth reviewing what Arizona gets right in terms of tax policy. ![]()
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