![]() In what is already a year of significant bipartisan focus on tax relief, 2022 is also launching something of a flat tax revolution. Another four adopted legislation doing so this year, and a planned transition in a fifth state is now going forward under a recent court decision. Those in the highest tax bracket will see their rate drop from 4.5% to 2.5%.In more than a century of state income taxes, only four states have ever transitioned from a graduated-rate income tax to a flat tax. According to the Arizona Center for Economic Progress, the lowest earners in the state may see an average yearly saving of $3. Everyone's tax rate will decrease, but it benefits the wealthy the most.įor example, those in the lowest tax bracket will see their rate drop from 2.59% to 2.5%. However, most people will not see that much tax relief. Ducey's office has promoted the plan, which they believe will save Arizonans, on average, around $300. “Essentially, what this is doing, is collapsing that into a 2.5% flat tax rate that everyone pays.”Īrizona's four tax brackets will be widdled down to one. So based on how much you make, that can put you into a higher tax bracket,” said Jenna Bentley, with the Goldwater Institute. “So currently, Arizona’s income tax is based on a tier system. ![]() The law, passed in 2021, allowed early implementation if the state hit certain economic thresholds. Arizona's 2.5% flat income tax will take effect on January 1, one year ahead of schedule.
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