Arizona has a flat 2.50 percent individual income tax rate. Arizona has a 4.9 percent corporate income tax rate, a 5.60 percent state sales tax rate, and an average combined state and local sales tax rate of 8.52 percent. Arizona has a 0.48 percent effective property tax rate on owner-occupied housing value. Arizona does not have an estate tax or inheritance tax. Arizona’s gas tax is 19 cents per gallon, and its cigarette excise tax is $2.00 per pack of 20 cigarettes.
Arizona raises tax revenue primarily through general sales taxes (47.1 percent of total state and local tax revenue), property taxes (24.7 percent), and individual income taxes (12.9 percent). Arizona collects $5,006 in state and local tax collections per capita, carries $5,177 in state and local debt per capita, and has a 78 percent funded ratio of public pension plans. Arizona’s tax system ranks 14th overall on the 2026 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Arizona is no exception. Use the tabs below to compare Arizona taxes with other states and to see how Arizona raises tax revenue. You can also browse our tax maps, which are compiled from our annual publication, Facts & Figures 2026: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
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Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Property taxes are the primary tool for financing local governments. While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services.
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Arizona now joins a growing cohort of states that are moving toward a flat income tax. Pending revenue triggers, the income tax rate will be reduced to 2.5 percent giving Arizona one of the lowest individual income tax rates in the country.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
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The FDA’s expected announcement of a national ban on menthol-flavored cigarettes and cigars with a characterizing flavor would carry significant revenue implications for both the federal government and state governments, with likely limited benefits in smoking cessation.
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Unlike other studies that look solely at tax burdens, the State Business Tax Climate Index measures how well or poorly each state structures its tax system. It is concerned with the how, not the how much, of state revenue, because there are better and worse ways to levy taxes.
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Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections:
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