October 17, 2018

Arizona: Who Pays? 6th Edition

ARIZONA

ARIZONA STATE AND LOCAL TAXES

Taxes as Share of Family Income

					Top 20%
Income Group	Lowest 20%	Second 20%	Middle 20%	Fourth 20%	Next 15%	Next 4%	Top 1%
Income Range	Less than $17,900	$17,900 to $35,300	$35,300 to $55,000	$55,000 to $96,400	$96,400 to $189,900	$189,900 to $424,300	over $424,300
Average Income	$11,900	$28,000	$43,200	$73,900	$128,000	$271,100	$1,124,700
Sales & Excise Taxes	8.1%	6.7%	5.4%	4.1%	3.1%	2.0%	1.1%
General Sales – Individuals	3.8%	3.4%	2.9%	2.3%	1.8%	1.1%	0.7%
Other Sales & Excise – Ind.	1.1%	0.7%	0.5%	0.3%	0.2%	0.1%	0.0%
Sales & Excise on Business	3.2%	2.6%	2.1%	1.5%	1.1%	0.7%	0.4%
Property Taxes	4.5%	3.2%	2.7%	2.5%	2.2%	2.1%	1.7%
Home, Rent, Car – Ind.	4.1%	2.8%	2.3%	2.1%	1.8%	1.6%	0.5%
Other Property Taxes	0.4%	0.4%	0.4%	0.4%	0.4%	0.5%	1.2%
Income Taxes	0.4%	1.0%	1.3%	1.8%	2.2%	2.7%	3.1%
Personal Income Tax	0.3%	1.0%	1.3%	1.8%	2.1%	2.6%	3.0%
Corporate Income Tax	0.0%	0.0%	0.0%	0.0%	0.0%	0.1%	0.1%
TOTAL TAXES	13.0%	10.9%	9.4%	8.5%	7.5%	6.7%	5.9%

Individual figures may not sum to totals due to rounding. Download the table

TAX FEATURES DRIVING THE DATA in Arizona

Progressive Features	Regressive Features
Graduated personal income tax structure Provides a refundable income tax credit to offset the impact of sales taxes State sales tax base excludes groceries Requires the use of combined reporting for the corporate income tax	Provides an income tax deduction for state income taxes paid Provides a partial income tax exclusion for capital gains income Comparatively high reliance on sales taxes Fails to provide a refundable Earned Income Tax Credit (EITC) Fails to provide a property tax “circuit breaker” credit for low-income, non-elderly taxpayers Local sales tax bases include groceries

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, which measures the impact of each state’s tax system on income inequality, Arizona has the 11th most unfair state and local tax system in the country. Incomes are more unequal in Arizona after state and local taxes are collected than before. (See Appendix B for state-by-state rankings and the methodology section for additional detail on the index.)

Note: Figures show permanent law in Arizona enacted through September 10, 2018, at 2015 income levels. Top figure represents total state and local taxes as a share of non-elderly income. The sixth edition of Who Pays does not include the impact of the federal deduction for state and local taxes (SALT) because policy changes in the 2017 federal Tax Cuts and Jobs Act temporarily limited the extent to which the SALT deduction functions as a generalized offset of state and local taxes.