Tax Planning

Two Major Arizona Money Laws Are Changing In January

by
Julie Farless
on
12/29/2022
Two Major Arizona Money Laws Are Changing In January

Arizona residents can expect two significant law changes that could impact their wallets when the calendar turns to 2023. 

The first change is the implementation of the state’s new flat tax rate, which is the lowest in the nation. The second policy change is an increased minimum wage, which will have an impact on both the workforce and business owners throughout the Grand Canyon State.

Arizona’s Flat Rate Tax

In September 2022, Arizona Governor Doug Ducey (R) ordered that his massive income tax cut go into effect a full year ahead of schedule.

In a letter to Arizona Department of Revenue Director Robert Woods, Ducey's office stated, "In July 2021, I signed a historic tax reform package that secures the lowest flat rate tax in the nation, reduces every Arizonans' tax rate no matter their income, eliminates income taxes on veterans' military pensions, increases the charitable contribution deduction to 100 percent, and protects small businesses from a 77.7 percent tax increase." 

Credit: DSZC/Getty Images

Of the accelerated tax cut calendar, Ducey went on to say that "due to unprecedented economic growth, we can deliver additional tax relief to Arizonans one year ahead of schedule."

Originally slated to take effect in 2024, Arizonans will now begin paying the state’s new 2.5% tax rate in January 2023.

According to Phoenix NBC 12 News, residents in the lowest tax bracket will see their rate drop from 2.59% to 2.5%. Those in the highest tax bracket will see a more significant decrease from 4.5%.

In the aforementioned letter, Ducey noted that Arizona’s “economy is booming,” a fact that has been corroborated by The American Legislative Exchange Council’s 2022 “Rich States Poor States” report.

Arizona ranked third for overall economic outlook and first in performance. 

Arizona’s New Minimum Wage

Arizona's minimum wage is increasing again thanks to 2016 legislation that ties the state’s wage rates to inflation. Currently, the Phoenix metro area has the highest rate of inflation in the nation at 12.1%.

Credit: Douglas Sacha/Getty Images

Due to the high inflation statewide – and across the United States – throughout 2022, Arizona’s minimum wage will rise by over a dollar an hour to $13.85 starting January 1, 2023. 

What do you think about these changes to Arizona law?

Featured image Credit: DustyPixel/Getty Images

share this post
Search for matches...
Julie Farless

Julie Farless

Martinez & Shanken, PLLC is a Certified Public Accountant (CPA) firm based in Gilbert, Arizona. We provide a full range of accounting, bookkeeping, consulting, outsourcing and business services, but we specialize in tax preparation. We work with you to ensure that your personal or business processes are conducted in a manner that ensures ongoing integrity in your financial transactions. We are available to answer your questions and help with your ongoing tax planning and changing business needs.

Deborah Martinez & Earl Shanken
29 reviews

Arizona

Recommended Professionals

In the face of economic uncertainty, TaxBuzz is the industry's most up-to-date tax information.

Join 60,000 who get our weekly newsletter. No spam.

We know tax and accounting issues are complicated.

Do you have additional questions on this topic for this author?

Related Posts

Latest Posts