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Employer's Payroll Tax & Filing Requirements for the State of Arizona (AZ)
Managing payroll in Arizona requires staying current with state-specific regulations for income tax and unemployment insurance. With a state minimum wage that exceeds the federal standard and a flat income tax rate, employers must be diligent to
ensure compliance.
This guide covers the essentials to help you pay employees correctly and stay compliant with Arizona payroll regulations.
Applicable Arizona Payroll Taxes
In Arizona, employers are responsible for a few key state and federal payroll taxes. Here’s a quick overview of the taxes
in Arizona.
- Arizona is the state that has the state income tax rate of 2.5% and also has state unemployment taxes.
-
At the federal level, employers are required to withhold and pay Federal Income Tax, Social Security, and Medicare
(FICA) taxes. - Employers are also responsible for the Federal Unemployment Tax (FUTA).
Understanding these obligations is essential for maintaining compliance and avoiding penalties.
Register for AZ state income tax and unemployment tax on your own
Arizona tax agency:
-
Arizona Department of Revenue (DOR) – State income tax withholding
-
Arizona Department of Economic Security (DES) - state unemployment insurance (SUI) tax
To report and pay state income tax withholding in Arizona, employers must register with the Arizona Department of
Revenue (DOR).
Steps to Register with the Arizona Department of Revenue (DOR) and the Department of Employment
Services (DES)
1. Register via Online
- Step 1: Visit Arizona (DOR).
- Step 2: Navigate to the “Business” Section and click “Enroll to File and Pay Online.”
- Step 3: Review the instructions and click ‘Continue’.
- Step 4: If you don’t have an AZ taxes account, provide the required information and click ‘Register’.
- Step 5: Once your general AZ Taxes account is created, complete any remaining prompts to register for a withholding account.
- Step 6: You’ll receive your withholding account number, sign your AZ taxes account, and navigate to the ‘Link Accounts’ section to link your withholding account number.
2. Register by mail
- To register by mail, file the Arizona Joint Tax Application (Form JT-1/UC-001) and mail it to the respective address. Make sure to check withholding/Unemployment Tax in Box 2.
After successful registration, you will receive an Arizona Withholding Tax Account Number and an Arizona UI Tax Account Number. You can use this number to pay and file taxes to Arizona (DOR) and DES.
Arizona New Hire Reporting
Arizona employers are required by federal and state law to report all newly hired and rehired employees to the state’s New Hire Reporting Center. This helps enforce child support orders and prevent unemployment and workers’ compensation fraud.
Who needs to report?
All Arizona employers (including government agencies, nonprofits, and household employers) must report:
- New hires: Any employee who completes a W-4 and will be paid wages.
- Rehires employees: Former employees returning after a break of 60 consecutive days or more.
What information must be reported?
Employers of Arizona must report the newly hired and rehired employees. Here is the information required to report newly hired employees to the Arizona Department of Revenue.
Employer information:
- Name
- Address
- Federal Employer Identification Number (FEIN)
Employee information:
- Full name
- Address
- Social Security Number (SSN)
- Date of hire
- Date of birth (optional but recommended)
How to report new hires in Arizona?
To report newly hired employees, follow the steps given below.
1. Online (Preferred)
- Website: Arizona New Hire Reporting Center.
- Create an account or log in.
- Enter the required employer and employee details.
- Submit electronically — confirmation is provided immediately.
2. Electronic File Upload
- For bulk reporting (multiple employees).
- Supports text file, Excel, or CSV formats that meet Arizona specifications.
- Upload through the Arizona New Hire portal.
3. Mail
Complete the Arizona New Hire Reporting Form from the state website.
Arizona New Hire Reporting Center
P.O. Box 402
Holbrook, MA 02343
4. Fax
You can also fax the completed New Hire Reporting form to: (888) 282-0502.
What are the penalties for not filing a New hire report in Arizona?
If an employer in Arizona fails to submit a New Hire report, they may face the following penalties:
- $25 per person for each new hire, rehire, or independent contractor that is not reported, reported late, or reported with incomplete information.
- $500 per person if the failure to report is due to a conspiracy between the employer and the employee or contractor to avoid reporting.
Arizona State Payroll Tax Requirements
Arizona employers must withhold state income tax from employee wages based on Form A-4 and pay Unemployment Insurance (UI) tax on the first $8,000 of each employee’s wages. This section outlines the key state tax requirements that every Arizona employer must follow to ensure compliance.
State Income tax
Arizona has a flat state income tax rate of 2.5% on employee wages. Employers must withhold tax based on the employee’s Arizona Form A-4 and remit it to the Department of Revenue.
State Unemployment Tax
State unemployment taxes are state-level payroll taxes that employers pay to fund unemployment benefits for eligible workers who lose their jobs through no fault of their own.
Who is liable?
Arizona employers are liable for SUI taxes if they meet the following conditions:
- Paid $1500 in wages during a calendar quarter or;
- Had at least one Arizona employee working for any part of the week, for 20 or more different weeks during a calendar year.
Arizona State Unemployment Tax Rate
Employers of Arizona are required to pay state unemployment taxes to provide benefits for the employees. Here are the SUI tax rates offered by the Department of Employment Services (DES):
| Arizona SUI Tax Details | |
|---|---|
| Taxable Wage Base | $8,000 |
| Tax Rate Range | 0.2% – 5.40% |
| New Employer Rate | 2.00% |
Arizona Minimum Wage Requirements
Arizona sets its own minimum wage, which is higher than the federal rate and adjusts annually based on inflation. Employers must ensure they meet the current state minimum wage for all employees, including a separate, reduced rate for tipped workers—as long as tips make up the difference.
| Wage Type | Arizona Rates (per hour) | Federal Rates (per hour) |
|---|---|---|
| Minimum wage | $14.70 | $7.25 |
| Tipped Minimum Wage | $11.70 | $2.13 |
| Actual Tip Credit | $3.00 | $5.12 |
Overtime Regulations
Arizona follows the federal Fair Labor Standards Act (FLSA) for overtime rules, as the state has no separate overtime law. Non-exempt employees must be paid 1.5 times their regular rate of pay for any hours worked over 40 in a workweek.
Exemption:
Certain employees are exempt from overtime if they meet both the salary and duties tests under the FLSA. In Arizona, this typically includes:
- Executive employees
- Administrative employees
- Professional employees
To qualify for exemption, these employees must earn at least $684 per week on a salaried basis and perform the specific job functions defined by the FLSA.
Arizona Termination Reports
Arizona does not require a separate termination report when an employee leaves a job.
Arizona State Tax Payments
Arizona State Withholding Payments
Arizona employers are required to withhold state income tax from employees' wages and remit these withholdings to the Arizona Department of Revenue. The filing frequency depends on the amount of tax withheld:
- Monthly Filers: Employers who withhold more than $1,500 in state income tax per quarter must remit payments monthly. Payments are due on the 15th day of the following month.
- Quarterly Filers: Employers who withhold between $200 and $1,500 in state income tax per quarter must remit payments quarterly. Payments are due by the last day of the month following the end of each calendar quarter.
- Annual Filers: Employers who withhold less than $200 in state income tax per quarter may remit payments annually. Payments are due by January 31 of the year following the calendar year for which the tax was withheld.
| Quarter | Filing Deadline |
|---|---|
| Quarter 1 (January - March) | April 30 |
| Quarter 2 (April - June) | July 31 |
| Quarter 3 (July - September) | October 31 |
| Quarter 4 (October - December) | January 31 |
Methods to deposit Arizona State income tax withholding taxes
To deposit your state withholding taxes, you can use various payment methods, which include:
1. Online (Recommended):
To pay online via check or credit card sign in to AZ Taxes.
2. Mail
To pay by mail, make checks payable to Arizona Department of Revenue and include your EIN and filing period. Mail the check to:
Arizona Department of Revenue
PO Box 2900
Phoenix, AZ 85038-9085.
Arizona State Unemployment Tax Payments
Arizona employers must file Unemployment Tax and Wage Reports (Form UC-018) and make corresponding tax payments to the Arizona Department of Economic Security (DES) on a quarterly basis. The due dates are as follows:
| Quarter | Filing Deadline |
|---|---|
| Quarter 1 (January - March) | April 30 |
| Quarter 2 (April - June) | July 31 |
| Quarter 3 (July - September) | October 31 |
| Quarter 4 (October - December) | January 31 |
Methods to deposit Arizona State unemployment tax withholding taxes
To deposit your state Unemployment taxes, you can use various payment methods, which include:
1. Online (Recommended)
To pay your unemployment tax payment, sign in to the Arizona Unemployment Tax and Wage System.
2. Mail
To pay your unemployment taxes by mail, create a check and pay to DES. Make sure to include EIN and the filing period in front of the check or money order. If you printed a payment voucher enclose it with your payment, if you don’t have a voucher, it is not required. Mail the check to:
Arizona Department of Revenue
PO Box 2900
Phoenix, AZ 85038-9085
Arizona State Tax Filings
Quarterly State Income Tax Filings
Form (A1-QRT) Quarterly Withholding Tax Return: Form A1-QRT is a summary report of all income taxes withheld from employee paychecks during the quarter.
Deadline: Quarterly withholding tax returns are due by the last day of the month following the end of the calendar quarter. If any of the due dates fall on a weekend or holiday, the following business day will be considered as the due date.
| Quarter | Filing Deadline |
|---|---|
| Quarter 1 (January - March) | April 30 |
| Quarter 2 (April - June) | July 31 |
| Quarter 3 (July - September) | October 31 |
| Quarter 4 (October - December) | January 31 |
Quarterly State Unemployment Tax Filings
Unemployment Tax and Wage Report (UC-018): This is the quarterly form where you report total employee wages and calculate how much UI tax you own.
Deadline: Unemployment taxes are due by the last day of the month following the end of the calendar quarter.
| Quarter | Filing Deadline |
|---|---|
| Quarter 1 (January - March) | April 30 |
| Quarter 2 (April - June) | July 31 |
| Quarter 3 (July - September) | October 31 |
| Quarter 4 (October - December) | January 31 |
Annual State Tax Filings
Form (A1-R) Withholding Reconciliation Return: Form A1-R is an annual withholding reconciliation form. Employers who complete Form A1-QRT must file this form to reconcile their withholding deposits made with DOR.
Deadline: The deadline for filing annual Form A1-R is January 31.
Form AZ W-2 Wage and Tax Statement: Use the W-2 to file your income tax return with the IRS and your state, helping determine whether you've paid enough tax during the year or if you'll receive a refund or owe more.
Deadline: The deadline for filing the annual Form AZ W-2 is January 31.
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