New Arizona Income Tax Withholding Rates Effective For Wages Paid After December 31, 2022

December 21, 2022
YES Update

Arizona tax rates have decreased and as a result, AZDOR has revised withholding percentages and is requiring taxpayers to complete a new Form A-4 for 2023. Due to this change, every employee is required to fill out a new Arizona A-4 form effective for wages paid after January 1, 2023 unless they qualify to complete:

A-4V “Voluntary Withholding Request for Arizona Resident Employed Outside Arizona”

WEC “Withholding Exemption Certificate” for Arizona Nonresidents

WECI “Withholding Exemption Certificate, Native Americans with Instructions”

WECM “Withholding Exemption Certificate for Military Spouses”

PLEASE BE AWARE: To ensure compliance with AZDOR requirements, on 12/30/22, the State will change ALL employee records to the default rate of 2.0%. Any existing additional dollar amounts an employee had chosen to be withheld will not be changed.

  • On 12/30/2022: ALL employees are defaulted to 2.0% rate. Any existing additional dollar amounts will not be changed.
  • Beginning 12/31/22: Employees can change their tax withholding from the default 2.0% if they choose to.
  • 01/10/23 by 1 pm: Deadline to make changes to the 2.0% rate that the state defaulted all employees to on 12/30/22.
  • On 01/12/2023: the first payday that the new A-4 rates will be used for calculating AZ withholding taxes.
    • NOTE: Employees have the option to update their A-4 at any time during the tax year but are encouraged to consult with their tax advisor related to these new updates from AZDOR to determine how they may be affected.

NEW RATES

% of gross taxable wages starting January 2023

0.0% -- See Note 1 below

0.5%

1.0%

1.5%

2.0% -- New default rate

2.5%

3.0%

3.5%

Note 1: Only available if the employee had no tax liability last year and does not expect to have any tax liability in the current year. Annual renewal required.