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AZ · payroll profile

Arizona

Everything an out-of-state employer needs before running a Arizona payroll: what to withhold, which form the employee signs, whether reciprocity applies, and who to register with.

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Personal income tax
Flat 2.5%
Reciprocal agreements
4 states
SUI wage base 2026
$8,000
Local income taxes
No

Income tax withholding

Imposes wage income tax Yes
Rate structure Flat 2.5%
Withholding certificate A-4
Employee's Arizona Withholding Election
Accepts federal Form W-4 No
Convenience-of-the-employer rule No
Nonresident withholding threshold 60 days
Arizona withholding is not required for a nonresident employee physically present in Arizona for fewer than 60 days in a calendar year for the purpose of performing a service benefitting the employer, where the employer is an Arizona business or a related entity with substantial Arizona ownership ties.
Local income taxes No
Arizona municipalities levy transaction privilege (sales) taxes but no local personal income or wage tax.

Reciprocity

Arizona exempts residents of 4 states from Arizona withholding, provided the employee files WEC with the employer.

CaliforniaIndianaOregonVirginia
DIRECTIONAL -- NOT a mutual agreement. Residents of California, Indiana, Oregon and Virginia performing services in Arizona may claim exemption from ARIZONA withholding on Form WEC because their home state grants a credit for taxes paid to Arizona. Arizona residents working in CA/IN/OR/VA get NO corresponding exemption from those states' withholding. Form WEC must be re-filed at the beginning of each calendar year.

States that exempt Arizona residents

A Arizona resident working in these states files that state's certificate and is taxed only by Arizona.

District of Columbia

Unemployment insurance and paid leave

Taxable wage base 2026 $8,000
2025 base was $8,000.
New employer rate 2%
Experience rate range 0.03% – 8.36%
Experience-rating method reserve ratio
Employee UI contribution No
Paid family / medical leave No

Employer registration

Tax agency
Arizona Department of Revenue
UI agency
Arizona Department of Economic Security / Arizona Department of Revenue

Sources

azdor.gov · azdor.gov · azdor.gov · oui.doleta.gov · oui.doleta.gov · oui.doleta.gov

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This is a determination aid, not advice. StateSide encodes published state rules and applies them mechanically to the facts you enter. It does not know your entity structure, your nexus history, your equity compensation, or the dozens of exceptions that turn a clean rule into a judgement call. Every determination cites the state source it came from — verify against that source, and take anything consequential to a payroll tax professional before you act on it.