Updated July 17, 2021

As part of the Budget process during the summer of 2021, the Arizona legislature also made some significant changes to the Arizona Income tax laws, including:

Retroactive to Jan 1, 2021, the full amount (instead of only $3500) of benefits, annuities and pensions received as retired or retainer pay of the uniformed services will be subtracted when computing Arizona AGI.
For TY2021, the maximum aggregate individual tax rate is 4.5%.
For tax years starting in Jan 1, 2022, the marginal tax rates have been lowered.

For more details and specifics, see:

Summary of the SB1828 provided by AZ NATP member, Katie Gudgel.
AZ Legislature summaries by the Senate and by the House
The full text of SB1828

01/09/2021

During our Arizona Updates Webinar on January 7, 2021, Katie Gudgel highlighted several bills related to the preparation of individual and corporate income tax returns that were approved during 2020. Those included:

SB 1021: Electronic Signatures
SB 1348: Filing Requirements, Updates for expired provisions, Interaction of Charitable credits and deductions
HB 2494 / SB 1296: Adopting IRS Conformity
HB 2771: Business Credits
SB 1131: Use of CPA

In addition, during 2020, the Arizona Department of Revenue published:

GTP 20-01: Reviewing Paid Preparers
ITP 20-01: Credit for Foreign Taxes Paid through Regulated Investment Companies
GTN 20-03: Electronic Signatures

06/17/2019

During our Annual Conference, we had the participation of the Arizona Department of Revenue. Some questions and concerns arose during their presentation. Today we have received some answers and we are thrilled to share with our members:

Conformity – – –

Conformity did not impact the ability for taxpayers to claim the credits for donating to qualified charitable organizations, qualified foster care charitable organizations, public schools or school tuition organizations. Taxpayers that itemize deductions, start with the federal itemized deductions and then make various Arizona adjustments including deducting medical expenses to the extent not already included in the federal itemized deductions. Arizona Revised Statutes section 43-1042(B) still provides that Arizona taxpayers that itemize may deduct 100% of their medical expenses. The withholding percentages will not change for the tax year 2019.

Power of Attorney – – –

In discussion on how to improve form intake, turnaround time and training for staff.

Practitioner Phone Number – – –

Seeing if we can get this reinstated.

Corporate E-File – – –

Taxpayers, CPA’s, Paid Preparers, etc. will need to verify with their software companies what forms those third party software companies support. Click the link below to see the list of Corporate forms that will be available to E-filed.

AZ Corporate forms

01/17/2019

ADOR Notice: 2018 Standard Deductions, Exemption Amounts and Tax Brackets

The Arizona Department of Revenue today provided taxpayers with tax year 2018 annual inflation adjustments for Arizona standard deductions, personal exemptions, and the X & Y tax table. Tax year 2018 adjustments generally are used on tax returns filed in 2019.

2018 Arizona Standard Deduction, Personal Exemption, X & Y Tax Table

What are the 2018 Arizona standard deduction amounts?

For 2018, the Arizona standard deduction was indexed for inflation. The Arizona standard tax deduction amounts for taxpayers who do not itemize deductions are listed below.

Tax Year 2018 Standard Deduction Table
If your filing status is:	Amounts
Single	$5,312
Married Filing Joint	$10,613
Married Filing Separate	$5,312
Head of Household	$10,613

What are the 2018 Arizona personal exemption amounts?

For 2018, the Arizona personal exemption amounts were adjusted for inflation. The Arizona personal exemption amounts for taxpayers are listed below.

Tax Year 2018 Personal Exemption Amounts
If your filing status is:	Amount
Single	$2,200
Married Filing Joint and claiming no dependents	$4,400
Married Filing Joint and claiming at least one dependent excluding persons who did not qualify as a dependent on your federal return	$6,600
Head of Household and you are not married	$4,400
Head of Household and you are a married person who qualifies to file as head of household	$3,300, or complete Form 202
Married Filing Separate with neither spouse claiming any dependents	$2,200, or complete Form 202
Marred Filing Separate return with one spouse claiming at least one dependent excluding persons listed who did not qualify as a dependent on your federal return	$3,300, or complete Form 202

2018 Individual Income Tax Brackets

For 2018, the individual income tax brackets have been adjusted for inflation.

TABLE X – USE TABLE X IF YOUR FILING STATUS IS SINGLE OR MARRIED FILING SEPARATE
(a)		(b)	(c)			(d)	(e)			(f)
If taxable income from Form 140, line 46 is:		Enter the amount from Form 140, line 46	Multiply the amount entered in column (b) by			Enter the result	Subtract			This is your tax. Round the difference and enter this amount on Form 140, line 47
Over	But NOT over	Enter the amount from Form 140, line 46	Multiply the amount entered in column (b) by			Enter the result	Subtract
0	$10,602		×	.0259	=		−	0.00	=
$10,602	$26,501		×	.0288	=		−	$31.00	=
$26,501	$53,000		×	.0336	=		−	$158.00	=
$53,000	$158,996		×	.0424	=		−	$624.00	=
$158,996	And over		×	.0454	=		−	$1,101.00	=

TABLE Y – USE TABLE Y IF YOUR FILING STATUS IS MARRIED FILING JOINT OR HEAD OF HOUSEHOLD
(a)		(b)	(c)			(d)	(e)			(f)
If taxable income from Form 140, line 46 is:		Enter the amount from Form 140, line 46	Multiply the amount entered in column (b) by			Enter the result	Subtract			This is your tax. Round the difference and enter this amount on Form 140, line 47
Over	But NOT over	Enter the amount from Form 140, line 46	Multiply the amount entered in column (b) by			Enter the result	Subtract
0	$21,202		×	.0259	=		−	0.00	=
$21,202	$53,000		×	.0288	=		−	$61.00	=
$53,000	$105,998		×	.0336	=		−	$316.00	=
$105,998	$317,990		×	.0424	=		−	$1,249.00	=
$317,990	And over		×	.0454	=		−	$2,203.00	=

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Notice to Taxpayers Claiming Credits for Contributions

Credit For Contributions to Arizona Public Schools (Form 322)

For the purpose of claiming Arizona’s tax credit for contributions made or certain fees paid to a public school, the Arizona Department of Revenue now requires that taxpayers report the school’s County Code, Type Code, and District Code & Site Number (CTDS) number on the Arizona income tax return for any contributions or fees made on Form 322.

The CTDS is a nine (9) digit number that the Arizona Department of Education uses to identify Arizona public and charter schools.

To find the CTDS number for a public school in Arizona, please visit the Arizona Department of Education’s webpage at: http://www.ade.az.gov/edd or visit our website for a list.

Credits For Contributions to QCOs and QFCOs (Form 321 and Form 352)

Effective in 2018, the Arizona Department of Revenue has assigned a five (5) digit code number to identify each Qualifying Charitable Organization (QCO) and Qualifying Foster Care Charitable Organization (QFCO) for Arizona tax credit purposes. Taxpayers must use the “QCO Code” or “QFCO Code” of certified organizations to claim the tax credits for contributions QCOs or QFCOs. The department’s lists of qualifying charities include the code assigned to each organization and are available at azdor.gov/tax‐credits/contributions‐qcos‐and‐qfcos.