In the State of Arizona, taxes are levied through or by two different sovereigns: (a) the State of Arizona and (b) the United States of America.
While there are many different taxes to which a person can be, or has been, subject, the following are often of particular interest to many:
Federal Income Tax
The Federal income tax is levied on both residents and non-resident who earn income in the United States of America.
Arizona Income Tax
The State of Arizona’s income tax is levied on both residents and non-resident who earn income in Arizona.
Federal Employment Tax
The Federal employment tax is levied upon both employers and employees for wages earned in the United States of America and consist of the FICA and FUTA taxes. Half of the federal employment tax is paid the employers and the other half is paid by employees.
Federal Estate Tax
The Federal Estate Tax is a tax on person’s right to transfer property upon death. This tax is paid by the estates of decedents rather than the beneficiaries.
Arizona Estate Tax
The State of Arizona no longer levies an estate tax.
Federal Gift Tax
The Federal Estate Tax is a tax on person’s right to transfer property during that persons’ life. This tax is paid by the person giving the gift rather than the person receiving the gift.
The State of Arizona does not have a property tax on household goods. Further, real property taxes are not levied by the State of Arizona,; rather, the counties in which real property is located.
Arizona Transaction Privilege Tax (Arizona’s “Sales Tax”)
Unlike a traditional sales tax, which is levied directly upon purchasers, Arizona’s transaction privilege tax is levied upon sellers, but can be passed on to purchasers.
Arizona Use Tax
The State of Arizona imposes a tax on any person who uses, stores, or consumes in Arizona any tangible personal property purchased from a retailer that does not collect such tax, e.g. out-of-state retailers with no physical presence in Arizona.
Vehicle License Tax
The State of Arizona levies a license tax upon vehicles registered in Arizona.
This brief overview of some important considerations associated with taxation in Arizona is by no means comprehensive. Always seek the advice of a competent professional when making important financial and legal decisions.
Douglas K. Cook is an Arizona tax attorney with over 40 years of experience as a practicing attorney. Although Cook & Cook's office is located in Mesa, Arizona, the attorneys at Cook & Cook represent clients throughout the Phoenix, Arizona Metropolitan area including the following east valley cities: Scottsdale, Paradise Valley, Tempe, Chandler, & Gilbert.