Arizona State Income Tax Brackets 2021: Changes to Help Fund Schools and Services

The state of Arizona has made significant changes to its individual income tax brackets for the year 2021. The new law, which was signed into effect by Governor Doug Ducey (R) this week, aims to restore the competitive edge of Arizona's tax code by reducing individual income taxes for all individuals and non-corporate businesses.

One of the key changes is the implementation of a surcharge on high earners, which will help fund schools, roads, police, and other essential services. This surcharge, known as Proposition 208, imposes a tax rate of on those who earn above $250,000 per year.

Another significant change is the creation of a cap on the top marginal rate. SB 1827, a separate bill that was enacted this week, sets a cap of 4.5 percent on the top marginal rate when combined with the general rates and Proposition 208 surcharge.

Property taxes are also affected by the new law. These taxes are the single largest source of state and local revenue in the U.S., and they will continue to play a vital role in funding essential services.

In addition to these changes, the new law also includes several other reforms designed to improve the state's tax structure. For example, it reduces commercial property taxes and consolidates income tax brackets, which will help restore Arizona's reputation as a low-tax alternative to California.

The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment, and individual income taxes have been an essential part of the U.S. tax system ever since. Arizona's new law is designed to bring the state's individual income tax rates more in line with those of other states, while also ensuring that the state has sufficient revenue to fund its essential services.

Overall, the changes to Arizona's individual income tax brackets for 2021 are designed to help restore the competitive edge of the state's tax code, improve the state's tax structure, and ensure that the state has sufficient revenue to fund its essential services. With these changes in place, Arizona is well-positioned to remain a low-tax alternative to California while also ensuring that it has the resources it needs to support its citizens and economy.

Arizona state income tax brackets 2021