Arizona Employee Tax Withholding Help

Background

When you pay employees in Arizona, you will need to set up the tax allowances they completed on their Arizona tax withholding form. For more information, view the Arizona Withholding Election Form A-4 and see instructions here.

For 2023 : Any employees who have not updated their A-4 form in 2023 and are currently set up in the software will be calculated at a rate of 2%, except for employees who had a rate of 0%, who will remain the same.

How to Set up Arizona Employee Taxes

When you enter tax allowances for employees in Arizona, you will need to enter the withholding percentage rate the employee has elected on their form. For new customers adding employees in the wizard, this is found under the Tax Information page for the employee.

For employees you add after you complete the wizard, you will be prompted to enter their tax info under Payroll > Employees > Employee List > Click the Employee Name > Taxes > Edit. These fields are under the “State and Local Withholding” section.

State Elected Percentage Rate: Enter the percentage the employee has checked on their Arizona Withholding Election Form A-4 form. If the employee has not yet completed an A-4, employers are instructed to enter a withholding percentage of 2.0% until you receive a completed form from the employee.

Arizona’s current withholding tables are based on these percentage rates of gross taxable wages.

Note: These are the only values accepted in the “State Elected Percentage Rate” field :

State Withholding Percentages per the 2023 withholding form:

Percentage Rates

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Additional State Withholding: If the employee wants an extra amount to be withheld for each paycheck, enter it here. Otherwise, leave this field blank.

Check out our blog article, “AZ State Income Tax Form Requires Employer Action, “to learn more.