How does Arizona’s tax code compare? Arizona has a flat 2.50 percent individual income tax rate. Arizona has a 4.9 percent corporate income tax rate. Arizona also has a 5.6 percent state sales tax rate and an average combined state and local sales tax rate of 8.38 percent. Arizona has a 0.45 percent effective property tax rate on owner-occupied housing value.
Arizona does not have an estate tax or inheritance tax. Arizona has a 19 cents per gallon gas tax rate and a $2.00 cigarette excise tax rate. The State of Arizona collects $4,606 in state and local tax collections per capita. Arizona has $5,460 in state and local debt per capita and has a 73 percent funded ratio of public pension plans. Arizona’s tax system ranks 15th overall on the 2025 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Arizona is no exception. The first step towards understanding Arizona’s tax code is knowing the basics. How does Arizona collect tax revenue? Click the tabs below to learn more! You can also explore our state tax maps, which are compiled from our annual publication, Facts & Figures 2024: 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.
115 min read
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.
2 min read
Tax burdens rose across the country as pandemic-era economic changes caused taxable income, activities, and property values to rise faster than net national product. Tax burdens in 2020, 2021, and 2022 are all higher than in any other year since 1978.
24 min read
Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
8 min read
Graduated corporate rates are inequitable—that is, the size of a corporation bears no necessary relation to the income levels of the owners.
7 min read
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for 32 percent of state tax collections and 13 percent of local tax collections (24 percent of combined collections).
9 min read
However well-intended they may be, sales tax holidays remain the same as they always have been—ineffective and inefficient.
4 min read
Compare the latest 2023 sales tax rates as of July 1st. Sales tax rate differentials can induce consumers to shop across borders or buy products online.
8 min read
Taxes are the single most expensive ingredient in beer, costing more than the labor and raw materials combined.
3 min read
Of all alcoholic beverages subject to taxation, stiff drinks—and all distilled spirits—face the stiffest tax rates. Like many excise taxes, the treatment of distilled spirits varies widely across the states.
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States are in a better position to attract business investment when they maintain competitive real property tax rates and avoid harmful taxes on tangible personal property, intangible property, wealth, and asset transfers.
3 min read
Tobacco is the most highly taxed consumer product in the United States. The tools on this page allow you to explore state tax rates and the effects tax policy and tobacco regulations can have on state revenues, smuggling, and effective tax rates for different income groups.
2 min read
An ideal sales tax applies to a broad base of final consumer goods and services, with few exemptions, and is levied at a low rate.
5 min read
Individual income tax rates can influence location decision-making, especially in an era of enhanced mobility, where it is easier for individuals to move without jeopardizing their current job, or without limiting the scope of their search for a new one.
5 min read
Recreational marijuana taxation is one of the hottest policy issues in the U.S. Currently, 21 states have implemented legislation to legalize and tax recreational marijuana sales.
6 min read