Arizona offers a vibrant environment for business with over 700,000 small businesses, employing about 42% of the state’s workforce. Whether you’re an established business owner or planning to start a new venture, understanding the tax landscape in Arizona is crucial. This guide provides an overview of the various taxes small businesses in Arizona must navigate, including tax rates, filing requirements, and deadlines.
Types of Business Taxes in Arizona
Business owners in Arizona may be subject to various taxes depending on their business structure, activities, and revenue. Here’s a breakdown of the main types of taxes:
Corporate Income Tax
Applicable Entities: C corporations, S corporations, LLCs with C corp elections
Tax Rate: 4.9%; $50 minimum tax
Filing Requirements: File Form 120 or Form 120A by the 15th day of the fourth month after the tax year ends.
Estimated Payments: This is required if liability is at least $1,000. Payments are due quarterly by the 15th day of the fourth, sixth, ninth, and 12th months of the tax year.
Pass-Through Entity (PTE) Tax
Applicable Entities: Entities treated as a partnership or S corporation for federal income tax purposes
Tax Rate: 2.5%
Filing Requirements: File Form 165 (for partnerships) or Form 120S (for S corporations) by the 15th day of the third month following the close of the tax year.
Estimated Payments: This is required if liability for the preceding tax year exceeds $150,000. Payments are due quarterly on the 15th day of the fourth, sixth, and ninth months of the current tax year and the 15th day of the first month following the close of the tax year.
Small Business Income Tax
Applicable Entities: Individual taxpayers with small business gross income
Tax Rate:2.5%
Filing Requirements: File Form 140-SBI by the 15th day of the fourth month following the close of the tax year.
Estimated Payments: This is required if liability exceeds $1,000. Payments are due quarterlyby the 15th day of the fourth, sixth, and ninth months of the current tax year and the 15th day of the first month following the close of the tax year.
Transaction Privilege Tax
Applicable Activities: Certain business activities
Tax Rate: Varies by the type of activity, city, and county
Filing Requirements: File Form Number TPT-2 monthly, quarterly, or annually, depending on tax liability.
Estimated Payments: This is required by June 20 (June 30, if filed electronically) if the annual liability is at least $4.1 million.
Withholding Tax
Applicable Entities: Employers with employees
Tax Rate: Varies based on gross taxable wages
Filing Requirements:Employers who remit income tax on an annual basis will file Form A1-APR by January 31 of the following year. Employers that remit income tax on all other deposit schedules (including quarterly, monthly, semi-weekly, and next day) will file Form A1-QRT quarterly by April 30, July 31, October 31, and January 31 of the following year.
Estimated Payments: Payments due quarterly or at the same time as the employer’s federal withholding deposits based on withholding amounts.
Unemployment Insurance Tax
Applicable Entities: Employers with employees
Tax Rate: Varies based on the business’s experience rating
Filing Requirements: File quarterly reports (UC-018) by April 30, July 31, October 31, and January 31.
Personal Property Tax
Applicable Entities: Businesses using personal property
Tax Rate: Based on property type and value
Filing Requirements: Report annually to the county assessor by April 1.
How to File and Pay Arizona Business Taxes
Business taxes in Arizona can be filed and paid through various methods:
Online Filing and Payment: Use AZTaxes for electronic submissions and payments.
Mail: Send forms and payments to the address provided (where applicable).
Important Deadlines
Keep track of these key dates to avoid penalties:
Corporate Income Tax Returns: Due by the 15th day of the fourth month after the tax year ends.
Estimated Tax Payments: Due quarterly by the 15th day of the fourth, sixth, ninth, and 12th months of the tax year.
Transaction Privilege Tax Returns: Monthly, quarterly, or annual filing based on sales volume.
Withholding Tax Returns: Due by January 31 of the following year
Unemployment Insurance Reports: Due quarterly by April 30, July 31, October 31, and January 31.
Tax Credits and Incentives
Arizona offers several tax credits and incentives for small businesses, including:
Qualified Facility Tax Credit: Available for qualifying capital investments and net new jobs. The maximum credit is $30 million per tax year.
Credit for Increased Research Activities: Available for qualified research conducted in Arizona and equal to 24% of the first $2.5 million in qualifying expenses plus 15% of the qualifying expenses in excess of $2.5 million.
Learn more by visiting Gusto’s article dedicated to Arizona tax credits for businesses.
Arizona business tax breakdown by business type
Business taxes can get complicated, so we’ve included a chart below that breaks down the taxes different business structures usually pay.
Keep in mind that pass-through entities don’t pay federal income taxes themselves—the obligation is passed on to their business owners or shareholders, who pay them through their personal income tax returns.
Business type | Personal income tax | Small business income tax | PTE tax | Corporate income tax | Transaction privilege tax | Withholding tax | Unemployment tax | Federal income taxes |
C corporation | No | No | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
S corporation | Yes (pass-through), if not making PTET election | Yes, if elected | Yes, if elected | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
LLC | Yes (pass-through), if not making the PTET election | Yes, if elected | Yes, if elected | Depends on how it’s structured | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Partnership | Yes (pass-through), if not making the PTET election | Yes, if elected | Yes, if elected | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Sole proprietorship | Yes (pass-through) | Yes, if elected | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
File your Arizona small business taxes with Gusto
As a business owner, your time and energy are valuable, finite resources. So, instead of managing your taxes manually, let Gusto give you a hand. Our easy-to-use software automatically files all your payroll taxes each time you run payroll, freeing up your bandwidth for the work that matters most.
Learn how else Gusto can simplify the operations of your small business by creating an account today.
Small Business Taxes in Arizona: The Employer’s Complete 2024 Guide
Arizona offers a vibrant environment for business with over 651,000 small businesses, employing about 42% of the state’s workforce. Whether you’re an established business owner or planning to start a new venture, understanding the tax landscape in Arizona is crucial. This guide provides an overview of the various taxes small businesses in Arizona must navigate, including tax rates, filing requirements, and deadlines.
Types of Business Taxes in Arizona
Business owners in Arizona may be subject to various taxes depending on their business structure, activities, and revenue. Here’s a breakdown of the main types of taxes:
Corporate Income Tax
Applicable Entities: C corporations, S corporations, LLCs with C corp elections
Tax Rate: 4.9%; $50 minimum tax
Filing Requirements: File Form 120 or Form 120A by the 15th day of the fourth month after the tax year ends.
Estimated Payments: This is required if liability is at least $1,000. Payments are due quarterly by the 15th day of the fourth, sixth, ninth, and 12th months of the tax year.
Pass-Through Entity (PTE) Tax
Applicable Entities: Entities treated as a partnership or S corporation for federal income tax purposes
Tax Rate: 2.5%
Filing Requirements: File Form 165 (for partnerships) or Form 120S (for S corporations) by the 15th day of the third month following the close of the tax year.
Estimated Payments: This is required if liability for the preceding tax year exceeds $150,000. Payments are due quarterly on the 15th day of the fourth, sixth, and ninth months of the current tax year and the 15th day of the first month following the close of the tax year.
Small Business Income Tax
Applicable Entities: Individual taxpayers with small business gross income
Tax Rate:2.5%
Filing Requirements: File Form 140-SBI by the 15th day of the fourth month following the close of the tax year.
Estimated Payments: This is required if liability exceeds $1,000. Payments are due quarterlyby the 15th day of the fourth, sixth, and ninth months of the current tax year and the 15th day of the first month following the close of the tax year.
Transaction Privilege Tax
Applicable Activities: Certain business activities
Tax Rate: Varies by the type of activity, city, and county
Filing Requirements: File Form Number TP-2 monthly, quarterly, or annually, depending on tax liability.
Estimated Payments: This is required by June 20 (June 28, if filed electronically) if the annual liability is at least $4.1 million.
Withholding Tax
Applicable Entities: Employers with employees
Tax Rate: Varies based on gross taxable wages
Filing Requirements: File Form A1-APR by Jan. 31 of the following year.
Estimated Payments: Payments due quarterly or at the same time as the employer’s federal withholding deposits based on withholding amounts.
Unemployment Insurance Tax
Applicable Entities: Employers with employees
Tax Rate: Varies based on business’s experience rating
Filing Requirements: File quarterly reports (UC-018) by April 30, July 31, October 31, and January 31.
Personal Property Tax
Applicable Entities: Businesses using personal property
Tax Rate: Based on property type and value
Filing Requirements: Report annually to the county assessor by April 1.
How to File and Pay Arizona Business Taxes
Business taxes in Arizona can be filed and paid through various methods:
Online Filing and Payment: Use AZTaxes for electronic submissions and payments.
Mail: Send forms and payments to the address provided (where applicable).
Important Deadlines
Keep track of these key dates to avoid penalties:
Corporate Income Tax Returns: Due by the 15th day of the fourth month after the tax year ends.
Estimated Tax Payments: Due quarterly by the 15th day of the fourth, sixth, ninth, and 12th months of the tax year.
Transaction Privilege Tax Returns: Monthly, quarterly, or annual filing based on sales volume.
Withholding Tax Returns: Due by January 31 of the following year
Unemployment Insurance Reports: Due quarterly by April 30, July 31, October 31, and January 31.
Tax Credits and Incentives
Arizona offers several tax credits and incentives for small businesses, including:
Qualified Facility Tax Credit: Available for qualifying capital investments and net new jobs. The maximum credit is $30 million per tax year.
Credit for Increased Research Activities: Available for qualified research conducted in Arizona and equal to 24% of the first $2.5 million in qualifying expenses plus 15% of the qualifying expenses in excess of $2.5 million.
Learn more by visiting Gusto’s article dedicated to Arizona tax credits for businesses.
Arizona business tax breakdown by business type
Business taxes can get complicated, so we’ve included a chart below that breaks down the taxes different business structures usually pay.
Keep in mind that pass-through entities don’t pay federal income taxes themselves—the obligation is passed on to their business owners or shareholders, who pay them through their personal income tax returns.
Business type | Personal income tax | Small business income tax | PTE tax | Corporate income tax | Transaction privilege tax | Withholding tax | Unemployment tax | Federal income taxes |
C corporation | No | No | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
S corporation | Yes (pass-through), if not making PTET election | Yes, if elected | Yes, if elected | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
LLC | Yes (pass-through), if not making the PTET election | Yes, if elected | Yes, if elected | Depends on how it’s structured | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Partnership | Yes (pass-through), if not making the PTET election | Yes, if elected | Yes, if elected | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Sole proprietorship | Yes (pass-through) | Yes, if elected | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
File your Arizona small business taxes with Gusto
As a business owner, your time and energy are valuable, finite resources. So, instead of managing your taxes manually, let Gusto give you a hand. Our easy-to-use software automatically files all your payroll taxes each time you run payroll—freeing up your bandwidth for the work that matters most.
Learn how else Gusto can simplify the operations of your small business by creating an account today.
