![]() The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. Kristie Lowery ( Kenneth Hausser ( Debera Salam ( by NTD’s Tax Technical Knowledge Services group Carolyn Wright, legal editor. ![]() Workforce Tax Services - Employment Tax Advisory Services It is estimated that the average Arizona taxpayer will receive a 13% income tax reduction starting in 2023, saving families approximately $350 a year.įor additional information concerning this Alert, please contact: Now, the Department states that the tax rates to be reflected on the 2022 Arizona personal tax return will be 2.55% and 2.98% in accordance with SB 1828.Īrizona Governor Doug Ducey announced that due to the state's surging economy, a letter was issued to the Arizona Department of Revenue with instructions to implement a 2.5% flat tax in tax year 2023, not in 2024 as originally anticipated. Through October 28, 2022, employees could elect a percentage of withholding ranging from 0.8% to 5.1% on Arizona Form A-4. The tax cuts were contingent on meeting general fund revenue collection goals. SB 1828, enacted in 2021, included a measure to phase out the current graduated personal income rates and replace them with a flat tax of 2.5% in several phases crossing tax years 2022 through 2024. If the employer uses a substitute electronic A-4 form for their employees (rather than a paper A-4), can the electronic form simply be updated to reflect the new withholding rate percentages? Do not send the new A-4 form to the Arizona Department of Revenue. ![]() The employee may want to retain a copy for their records as well. The employer should retain the A-4 with their employee and tax records. What should the employer do with the new completed A-4 forms? What if the employee wants their Arizona taxes to be overwithheld?Įmployees will still have the option of selecting a higher Arizona withholding rate than their wages might dictate and there is still a line to add an additional amount of Arizona withholding. The new default Arizona withholding rate is 2.0%. The employer should select 2.0% on behalf of the employee. What if the employee does not update their old Arizona Form A-4? The Department provides the following FAQs: Previously, the A-4 gave employees a range of withholding percentages as follows:Ġ.8%, 1.3%, 1.8%, 2.7%, 3.6%, 4.2% and 5.1% The updated A-4 gives employees a range of withholding percentages as follows:Ġ.5%, 1.0%, 1.5%, 2.0%, 2.5%, 3.0% and 3.5% Accordingly, the Department has published a revised Form A-4 (10-28-2022), which employees may begin using immediately. 1-1-2022), does not reflect these rate cuts. The Arizona Department of Revenue announced that SB 1828, enacted in 2021, substantially lowers individual income tax rates effective for tax year 20, and the current Form A-4, Arizona Withholding Percentage Election (rev.
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