Arizona Salary Paycheck Calculator
While the sun may be a scorcher in the desert, don’t let payroll taxes burn you. With answers to the most common Arizona payroll tax questions, this guide will be your payroll oasis.
Arizona state payroll taxes
What’s the state unemployment tax rate in Arizona?
Tax rates for Arizona unemployment tax vary from employer to employer.
New employers start by paying a 2% rate for at least the first two calendar years. Then the rate is adjusted based on the amount of tax you paid, the amount of benefits paid to your former employees, and your annual payroll totals.
Arizona’s unemployment tax is paid on the first $7,000 paid to each employee each year. This is the annual wage base. Unemployment tax is paid quarterly, and you’ll need to file reports using Form UC-108, Unemployment Tax and Wage Report. Even if you paid no wages or have no tax due, you’ll still need to file a report each quarter.
How is withholding tax calculated in Arizona?
Figuring out how much state income tax to withhold from workers’ paychecks depends on the information they provide in Form A-4, Employee’s Arizona Withholding Election, which employees should complete within five days of starting work.
Employees check a box on this form to state the percentage of their gross wages to withhold for state income tax. Some employees may be exempt from withholding because they expect to have no tax liability for the year. They will indicate that on their form, and that means you’ll withhold zero percent from their wages. You’ll need to remind employees that a new withholding form is required each year to renew their exemption.
Certain groups of workers are automatically exempt from withholding. These include military spouses, nonresidents, and certain Native Americans. And they’ll complete Form WEC, Withholding Exemption Certificate.
When is withholding tax paid in Arizona?
Be sure your company is registered with the Arizona Department of Revenue. Registration is necessary to make tax payments to the state.
You’ll pay withholding tax based on how much tax you withhold in a year. Filing frequencies range from annually to the next business day. Electronic payments are required if you owe $500 or more for any tax year from December 31, 2020 onwards.
Employers that annually pay withholding tax file Form A1-APR, Arizona Annual Payment Withholding Tax Return. It’s due no later than January 31, and you need to include copies of your federal Form W-2 and 1099 if any Arizona income tax was withheld.
All other employers file quarterly reports on Form A1-QTR, Arizona Withholding Reconciliation Return. These quarterly reports are due even for quarters when you paid no wages or have no tax to pay. Quarterly filers also need to submit a year-end reconciliation report on Form A1-R, Arizona Withholding Reconciliation Return. And like the annual filers, don’t forget to send copies of your Form W-2 and 1099.
What’s the minimum salary threshold in Arizona?
Because Arizona does not have its own salary threshold, it adheres to the federal salary threshold, which is now $684 per week (equivalent to $35,568 per year for a full-year worker). The Department of Labor permits employers to count some bonuses, commissions, and other incentive payments toward meeting the standard salary level (up to 10%). Employees who earn at least $107,432 per year may qualify as “highly compensated.” See this Department of Labor fact sheet for details.
When is Workers’ Compensation insurance required in Arizona?
Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit. Head to this article and click the workers’ comp audit reports dropdown for more information.
Is new hire reporting required in Arizona?
Is paid time off required in Arizona?
Arizona has two types of mandatory paid leave.
- Earned paid sick leave – Employers must provide paid sick leave to employees based on the number of hours they work.
- Employers with fewer than 15 employees – One hour of paid sick leave for every 30 hours worked, up to a maximum of 24 hours a year.
- Employers with more than 15 employees – One hour of paid sick leave for every 30 hours worked, up to a maximum of 40 hours a year.
- Voting leave – In certain circumstances, employers may need to give up to three hours of paid leave to allow workers to vote.
When do final paychecks need to be given when workers leave?
It depends on whether the employee leaves voluntarily or not.
For voluntary resignations, the final paycheck is due by the next regular payday.
For involuntary separations, the final wages are due within seven working days, or the next regular payday, whichever is sooner.
Federal payroll taxes in Arizona
Let’s not forget to think about federal payroll taxes.
How is FICA tax calculated?
FICA is short for the Federal Insurance Contributions Act. The FICA tax is made up of the Medicare tax and the Social Security tax.
In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. And the Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
You’ll each pay the amounts shown in the table below.
|Social Security tax||6.2% on the first $147,000 of wages in 2022|
|Medicare tax||1.45% on all wages|
How can I calculate how much federal withholding tax to take out of my employees’ paychecks?
The amount of tax you’ll withhold from paychecks depends on information from Form W-4, Employee’s Withholding Certificate. Have employees complete it when they start working for you. Things like tax filing status, the number of dependents, and your employee’s pay affect how much tax you’ll take out.
Using the federal withholding tables or payroll software, you can figure out the tax amount.
Do employers need to pay federal unemployment tax if they already pay state unemployment tax?
Yes, all employers need to pay federal unemployment tax. Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but most employers only have to pay 0.6% each year.
How is the Additional Medicare tax calculated?
While not all employees will have to pay the Additional Medicare tax, as an employer, you’ll need to withhold it from any worker earning more than $200,000 per year.
The tax rate for the Additional Medicare tax is 0.9% on wages over $200,000.
When are federal payroll taxes paid?
Like Arizona’s state payroll taxes, how often you pay depends on how much tax you owe.
FICA, federal withholding tax, and Additional Medicare tax are usually paid monthly or semi-weekly. But some employers with large payrolls may need to pay the next business day.
And regardless of when you pay, quarterly summary reports on Form 941, Employer’s Quarterly Federal Tax Return, need to be submitted to the IRS.
Federal unemployment tax is generally paid annually, but if you owe more than $500, you’ll need to make quarterly payments. Each time you make a payment, you’ll send the IRS Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.
Whew…you made it! Congratulations. It’s a lot of information to absorb. If thinking about payroll taxes in this much detail isn’t how you prefer to spend your time, comprehensive payroll providers can take charge of your payroll. From tracking employee timesheets to filing payroll tax returns, payroll providers free up your time so you can focus on your business.