Key figures
Arizona accounting
2026, with sources
A flat tax on a fixed-date code
Arizona taxes C corporations at 4.9% of Arizona taxable income, with a $50 minimum. It conforms to the Internal Revenue Code as of a fixed date that the legislature moves each year. For 2025 the governor vetoed several conformity bills before signing H.B. 4168 in June 2026, which moved the date to January 1, 2026 and decoupled from qualified production property. In a year when conformity is late, the Arizona return can need its own depreciation and research-cost schedules.
Affiliated corporations that form a unitary business file a combined return, and Arizona also allows a consolidated return election for an affiliated group.
The return is due on the 15th day of the fourth month after year end. Form 120EXT, filed by that date, extends the time to file but not to pay, and Arizona accepts a valid federal extension in its place. Estimated tax is paid in four installments, on the 15th day of the fourth, sixth, ninth and twelfth months of the tax year.
Apportionment
Arizona lets a taxpayer elect single sales factor apportionment, and with it market-based sourcing of services. Most software companies elect it. For the provision, the Arizona line is a single rate on apportioned income, but differences between the federal and Arizona codes in a lagging year belong in the deferred tax schedule.
The federal baseline
This page covers what Arizona adds. The federal rules underneath it apply here too.
Common questions
Does Arizona follow the federal Section 174 changes?
Arizona conforms to the Internal Revenue Code as of a fixed date and moves that date by statute. H.B. 4168, signed June 13, 2026, moved it to January 1, 2026, including federal provisions with retroactive effective dates, so Arizona now follows the 2025 federal law that lets domestic research costs be expensed again, with stated exceptions such as qualified production property. ADOR published filing instructions before the bill was enacted, so returns already filed for 2025 may need a second look once ADOR issues its follow-up guidance.
How is SaaS revenue apportioned?
If the company elects single sales factor apportionment, receipts from services are sourced to where the customer receives the benefit. Without the election, Arizona uses its weighted three-factor formula, which for a small remote-first team usually produces a less favorable answer.
Accounting next door
- CACalifornia accountingCalifornia taxes corporations at 8.84% with an $800 minimum franchise tax, apportions by a single sales factor with market sourcing, and does not follow federal Section 174 amortization or bonus depreciation.
- NVNevada accountingNevada has no corporate income tax. It taxes Nevada gross revenue above $4 million a year through the Commerce Tax, and payroll through the Modified Business Tax.
- UTUtah accountingUtah’s corporate franchise and income tax is 4.45% of net income for 2026, with a $100 minimum, apportioned on sales for most companies.
- COColorado accountingA flat 4.4% corporate income tax on federal taxable income, apportioned on sales. Conformity is rolling, with a 2026 decoupling from the federal FDDEI deduction.
- NMNew Mexico accountingA flat 5.9% corporate income tax from 2025, a $50 franchise tax per corporation, worldwide combined reporting by default and a three-factor apportionment formula.
Founder guides on this
- US GAAPUS GAAP for early-stage startups, in plain EnglishAccrual accounting, revenue recognition (ASC 606), leases (ASC 842), stock compensation and capitalized software: what each means for a small company.
- R&D taxThe R&D tax credit and Section 174A for startupsEngineering salaries can earn a federal R&D credit against payroll tax, and Section 174A lets you deduct US research again. What qualifies, what to track.
- FundraisingAudit-ready books before your Series AInvestors, lenders and auditors ask for the same things: accrual statements, reconciled accounts and support for every balance. How to be ready first.
More of the Arizona guide
- ReceivablesReceivables and sales tax in ArizonaSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in ArizonaPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in ArizonaWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in ArizonaRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in ArizonaCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.