{
  "$comment": "Arizona 2025: flat 2.5% on Arizona taxable income = Arizona AGI (federal AGI) − standard deduction (federal amount); dependent tax credit $100 per dependent with 5%-per-$1,000 phase-out.",
  "country": "us",
  "jurisdiction": "us-az",
  "taxYear": "2025",
  "period": {
    "start": "2025-01-01",
    "end": "2025-12-31",
    "tz": "America/Phoenix"
  },
  "status": "provisional",
  "engine": "us-payroll@1",
  "currency": "USD",
  "revision": 1,
  "params": {
    "incomeTax": {
      "kind": "brackets",
      "incomeBase": "stateWages",
      "brackets": {
        "single": [
          {
            "upTo": null,
            "rate": "0.025"
          }
        ],
        "mfj": [
          {
            "upTo": null,
            "rate": "0.025"
          }
        ],
        "mfs": [
          {
            "upTo": null,
            "rate": "0.025"
          }
        ],
        "hoh": [
          {
            "upTo": null,
            "rate": "0.025"
          }
        ]
      },
      "deductions": [
        {
          "type": "federalStandardDeduction",
          "id": "standard-deduction",
          "label": "Arizona standard deduction (equal to the federal basic standard deduction)"
        }
      ],
      "credits": [
        {
          "type": "perPerson",
          "id": "dependent-credit",
          "label": "Dependent tax credit ($100 per dependent under 17, $25 per dependent 17+)",
          "filer": {
            "single": "0",
            "mfj": "0",
            "mfs": "0",
            "hoh": "0"
          },
          "perChild": "100",
          "perDependent": "25",
          "dependents": "all",
          "phaseout": {
            "single": {
              "threshold": "200000",
              "rate": "0.005",
              "floor": "0",
              "reductionRounding": {
                "unit": "5",
                "mode": "up"
              }
            },
            "mfj": {
              "threshold": "400000",
              "rate": "0.005",
              "floor": "0",
              "reductionRounding": {
                "unit": "5",
                "mode": "up"
              }
            },
            "mfs": {
              "threshold": "200000",
              "rate": "0.005",
              "floor": "0",
              "reductionRounding": {
                "unit": "5",
                "mode": "up"
              }
            },
            "hoh": {
              "threshold": "200000",
              "rate": "0.005",
              "floor": "0",
              "reductionRounding": {
                "unit": "5",
                "mode": "up"
              }
            }
          },
          "phaseoutPer": "perCredit"
        }
      ]
    },
    "conformity": {
      "k401": true,
      "k403b": true,
      "k457": true,
      "hsa": true,
      "healthFsa": true,
      "dependentCareFsa": true,
      "section125": true
    },
    "programmes": []
  },
  "rounding": {
    "unit": "0.01",
    "mode": "halfUp",
    "stage": "perLine"
  },
  "knownCliffs": [
    {
      "id": "az-dependent-credit-step",
      "field": "params.incomeTax.credits.0.phaseout",
      "description": "Dependent credit falls by $5.00 per dependent for each $1,000 or fraction of AGI above $200,000 ($400,000 MFJ): crossing each $1,000 step by $1 loses $5.00 per dependent."
    }
  ],
  "notModelled": [
    "Above the $200,000/$400,000 AGI threshold the $25 credit for dependents 17+ should fall by $1.25 per $1,000 step; the single taper reduces it by the child step ($5), so it reaches 0 sooner (only with other dependents and AGI above the threshold)",
    "Family income tax credit (A.R.S. §43-1073; only applies at incomes where the standard deduction already eliminates tax for most households)",
    "Charitable-contribution increase to the standard deduction (25%/inflation-adjusted %)",
    "Subtractions for qualified tips, overtime, seniors (and TY2025 car-loan interest) adopted via HB 4168",
    "Age 65+/blind and 'other' exemptions, itemized deductions, other credits (school tuition, charitable, increased excise tax credit)",
    "Local taxes (Arizona has no local income tax)"
  ],
  "sources": [
    {
      "field": "period",
      "url": "https://www.azleg.gov/ars/43/01011.01.htm",
      "title": "A.R.S. §43-1011 — individual income tax imposed for each (calendar) taxable year",
      "retrieved": "2026-10-07"
    },
    {
      "field": "params.incomeTax.kind",
      "url": "https://www.azleg.gov/legtext/57leg/2R/summary/H.HB4168_061026_CAUCUSCOW.DOCX.htm",
      "title": "Arizona levies a personal income tax on residents' wages — HB 4168 (2026) House summary — Arizona individual income tax starts from federal adjusted gross income (A.R.S. §43-105 conformity)",
      "retrieved": "2026-10-07"
    },
    {
      "field": "params.incomeTax.incomeBase",
      "url": "https://www.azleg.gov/legtext/57leg/2R/summary/H.HB4168_061026_CAUCUSCOW.DOCX.htm",
      "title": "HB 4168 (2026) House summary — Arizona individual income tax starts from federal adjusted gross income (A.R.S. §43-105 conformity)",
      "retrieved": "2026-10-07"
    },
    {
      "field": "params.incomeTax.brackets",
      "url": "https://www.azleg.gov/ars/43/01011.01.htm",
      "title": "A.R.S. §43-1011(A)(9) — tax is 2.5% of taxable income (flat rate from TY2023 onward)",
      "retrieved": "2026-10-07",
      "note": "No rate change enacted for 2025 or 2026 (SB 1318 (2025) surplus-trigger rate cuts were not enacted; HB 4168 (2026) does not change the rate)."
    },
    {
      "field": "params.incomeTax.brackets",
      "url": "https://www.azleg.gov/legtext/57leg/1R/summary/S.1318FIN_REVISED.DOCX.htm",
      "title": "SB 1318 (2025) fact sheet — proposed rate reduction from 2.5% (not enacted)",
      "retrieved": "2026-10-07"
    },
    {
      "field": "params.incomeTax.deductions",
      "url": "https://www.azleg.gov/ars/43/01041.htm",
      "title": "A.R.S. §43-1041 — optional standard deduction ($15,750 / $23,625 / $31,500, indexed as federal)",
      "retrieved": "2026-10-07",
      "note": "A.R.S. §43-1041 as amended by HB 4168 (signed 13 June 2026; conformity to IRC incl. P.L. 119-21 retroactive to TY2025): $15,750 single/MFS, $23,625 HoH, $31,500 MFJ — equal to the 2025 federal basic standard deduction (national.json). Arizona's 2025 forms used these amounts under the Governor's executive order."
    },
    {
      "field": "params.incomeTax.deductions",
      "url": "https://www.azleg.gov/legtext/57leg/2R/summary/H.HB4168_061026_CAUCUSCOW.DOCX.htm",
      "title": "HB 4168 (2026) summary, provision 8 — standard deduction $15,750 single/MFS, $23,625 HoH, $31,500 MFJ; provision 2 — TY2025 conformity to P.L. 119-21",
      "retrieved": "2026-10-07"
    },
    {
      "field": "params.incomeTax.credits",
      "url": "https://www.azleg.gov/ars/43/01073-01.htm",
      "title": "A.R.S. §43-1073.01 — dependent tax credit: per dependent under 17 (+$25 per dependent 17+), reduced by 5% for each $1,000 or fraction of federal AGI above $200,000 ($400,000 MFJ)",
      "retrieved": "2026-10-07",
      "note": "TY2025 amount $100 per dependent under 17 (HB 4168 raised it to $125 from TY2026). $25 per dependent 17+. Taper modelled per credit at the child step: $5 (= 5% × $100) per $1,000 or fraction over the threshold (rate 0.005, rounded up to $5); for a $25 other-dependent credit the statutory step is $1.25 (one taper per credit item — see notModelled)."
    },
    {
      "field": "params.incomeTax.credits",
      "url": "https://www.azleg.gov/legtext/57leg/2R/summary/H.HB4168_061026_CAUCUSCOW.DOCX.htm",
      "title": "HB 4168 (2026) summary, provision 11 — dependent tax credit for dependents under 17 increased from $100 to $125 effective TY2026",
      "retrieved": "2026-10-07"
    },
    {
      "field": "params.conformity",
      "url": "https://www.azleg.gov/legtext/57leg/2R/summary/H.HB4168_061026_CAUCUSCOW.DOCX.htm",
      "title": "Arizona starts from federal AGI, so 401(k)/403(b)/457(b) deferrals, HSA, FSA and §125 premiums excluded federally are excluded in Arizona (no Arizona addition for these items)",
      "retrieved": "2026-10-07"
    },
    {
      "field": "params.programmes",
      "url": "https://des.az.gov/content/employers-who-pays-unemployment-taxes",
      "title": "Arizona DES — Who pays unemployment taxes: employers pay; by law unemployment taxes cannot be withheld from workers' wages. Arizona has no employee-paid state payroll programme",
      "retrieved": "2026-10-07"
    },
    {
      "field": "rounding",
      "url": "https://www.azleg.gov/ars/43/01011.01.htm",
      "title": "Tax computed at 2.5% of taxable income; MoneyOtter rounds the line to the cent (ADOR forms round to whole dollars)",
      "retrieved": "2026-10-07"
    }
  ]
}