Arizona employers, you could know that Senate Invoice 1828 considerably lowered the state’s earnings taxes beginning with the 2022 tax 12 months. However did you additionally know that it requires employer motion for the 2023 tax 12 months? You need to now give all workers—not simply new hires—a brand new AZ state earnings tax type.
Learn on to find out about adjustments to AZ state withholding and what you want to do.
AZ state withholding overview
Like most states, Arizona has a state earnings tax. Employers withhold state earnings taxes from worker wages. To find out how a lot to withhold, new hires should fill out the state W-4 type. Arizona’s W-4 type is Kind A-4.
Distribute Arizona Kind A-4, Worker’s Arizona Withholding Election, to new hires. Withhold state earnings tax in accordance with the data workers enter.
Staff enter the next data on Kind A-4:
- Social Safety quantity
- State earnings tax price
- Withholding exemption, if relevant
- Further withholding, if desired
Usually, solely new workers and workers who wish to change their withholding quantities full a brand new state W-4 type. Nevertheless, the 2023 AZ state earnings tax type is an exception.
New 2023 AZ state earnings tax type
In 2021, the Arizona Legislature handed Senate Invoice 1828, which lowered Arizona’s particular person earnings tax charges starting within the 2022 tax 12 months. And starting in 2023, Arizona will change its earnings tax construction to a flat tax price of two.5%.
On account of these adjustments, the withholding charges on prior types are now not consultant of the decrease earnings tax charges.
The 2023 Arizona Kind A-4 has been up to date to mirror Arizona’s decrease particular person earnings tax price. Right here’s what which means for employers and workers.
How do the 2022 and 2023 tax charges on Kind A-4 examine?
Once more, Arizona up to date Kind A-4 to mirror the decrease particular person earnings tax price. You’ll be able to examine the tax withholding choices between the 2022 and 2023 variations on the chart under.
|2022 Kind A-4 Tax Charges||2023 Kind A-4 Tax Charges|
Staff can nonetheless declare exemption from state earnings tax or request extra AZ earnings tax withholding on the brand new A-4 type.
What do employers have to do?
Arizona employers should make the brand new type accessible to all workers by January 31, 2023. This consists of your present workers who’ve already crammed out a state W-4 type.
Accumulate accomplished new A-4 types and preserve them in your workers’ information. Like several state W-4 type, don’t remit the types to the Arizona Division of Income.
You will get the brand new Arizona Kind A-4 on the state’s web site right here.
What occurs if workers don’t fill out the shape?
Staff who don’t fill out the brand new AZ state earnings tax type have a default withholding price of two.0%. Replace your data and payroll to mirror this 2.0% price.
New A-4 recap
Don’t neglect your employer duties. Evaluation the next data to assist keep up-to-date with the brand new A-4 type:
- Starting in 2023, Arizona may have a flat tax price of two.5%
- Employers should make the 2023 A-4 type accessible to all workers no later than January 31, 2023
- The seven new charges on the 2023 A-4 type are 0.5%, 1.0%, 1.5%, 2.0%, 2.5%, 3.0%, and three.5%
- Staff can nonetheless declare exemption from state earnings tax on the brand new A-4 type
- Staff can nonetheless request extra AZ earnings tax withholding on the brand new A-4 type
- If workers don’t fill out the brand new type, withhold the AZ default withholding price of two.0%
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