Key figures
Arizona payroll
2026, with sources
Withholding and unemployment insurance
Arizona’s income tax is a flat 2.5%, but withholding isn’t computed from it: each employee elects a flat percentage of gross pay on Form A-4. Employers register with ADOR for withholding and with DES for unemployment insurance, which in 2026 applies to the first $8,000 of wages at 2.0% for a new employer.
Wage rules
The Industrial Commission of Arizona enforces the minimum wage and earned paid sick time. There is no state paid family leave or disability program and no local payroll tax.
- Minimum wage: $15.15 statewide in 2026; Flagstaff and Tucson set their own.
- Paid sick time: 1 hour per 30 worked.
- Paydays: at least twice a month, no more than 16 days apart.
- Final pay: within 7 working days or the end of the next pay period after a discharge, whichever is sooner; next regular payday on a resignation.
- Workers’ compensation: required with any employee.
Deadlines
- Last day of the month after the quarterQuarterly withholding returnForm A1-QRT
- Last day of the month after the quarterQuarterly UI tax and wage reportForm UC-018
- Jan 31Annual withholding reconciliation, W-2sForm A1-R
- Within 20 days of hireNew-hire report
The federal baseline
This page covers what Arizona adds. The federal rules underneath it apply here too.
Common questions
How is Arizona withholding calculated?
Each employee chooses a flat percentage of gross wages on Form A-4. The 2026 choices run from 0.5% to 3.5% in half-point steps, and an employee who expects no Arizona tax liability can elect zero. An employee who doesn’t file one is withheld at the 2.0% default. Employers must offer Form A-4 to new hires.
Do small employers owe paid sick time?
Yes. Arizona’s earned paid sick time law covers every employer: an hour per 30 hours worked, capped at 24 hours a year for employers with fewer than 15 employees and 40 hours for larger ones.
Payroll next door
- CACalifornia payrollCalifornia payroll runs through one EDD account — UI at 3.4% for new employers, ETT, and 1.3% SDI with no wage cap — under a $16.90 minimum wage, daily overtime and same-day final pay.
- NVNevada payrollNo wage tax, but a payroll tax: the Modified Business Tax at 1.17% on quarterly wages above $50,000, alongside ESD unemployment insurance on a $43,700 wage base.
- UTUtah payrollA flat 4.45% income tax, a $50,700 UI wage base with industry-average rates for new employers, the federal minimum wage and a 24-hour final-pay rule.
- COColorado payrollWithholding, UI and FAMLI are three accounts with three quarterly filings. FAMLI is 0.88% in 2026, and Denver adds a higher minimum wage and a monthly head tax.
- NMNew Mexico payrollGraduated withholding up to 5.9%, UI on a $34,800 wage base, a $12.00 minimum wage with higher local rates, and paid sick leave under the Healthy Workplaces Act — but no paid family leave program.
How Arizona compares
- No tax on wagesStates with no state income tax on wagesArizona: withholds state income tax. 9 of 51 states are on the list.
- Paid leave payrollStates with a paid leave or disability payroll programArizona: no state program. 16 of 51 states are on the list.
- Local payroll taxStates with city, county or district payroll taxesArizona: state-level only. 14 of 51 states are on the list.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- ComplianceFirst-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
More of the Arizona guide
- AccountingAccounting and state tax in ArizonaCorporate tax, conformity to federal rules, apportionment and what it does to your books
- 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
- 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.