Nine states have flat taxes for the current tax year, none lower than 3%.
“Thanks to unprecedented economic growth, we can deliver additional tax relief to Arizonans one year ahead of schedule,” Ducey said in a letter to Revenue Director Rob Woods. The threshold to trigger the 2.5% rate early was $12.8 billion. The small business rate is 3 percent in tax year 2022 and is scheduled to decrease to 2.8 percent for tax years 2023-2024 before settling at 2.5 percent in tax year 2025. Doug Ducey notified the Department of Revenue to implement the flat tax for 2023 after state budget officials calculated the 2022 general fund revenue at $16.7 billion. In 2021, the tax rate on small business taxable income was a flat 3.5 percent whereas the standard top marginal individual rate was 4.5 percent. If the general fund threshold hadn’t been crossed this year, there would have been two rates for 2023: 2.53% for taxable income up to $27,272 and 2.75% for higher amounts. Opponents argued the cuts mainly benefit the wealthy and could create a funding shortage for schools, health care and other priorities in the future.Īrizona’s income progressive tax rates ranged from 2.59% at the bottom end to 4.5% for high earners when the cuts were passed. Ducey signs $12.8 billion tax-cutting state budget
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