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Payroll Software Accommodates Arizona Income Tax Withholding Changes

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The state of Arizona has made changes to the state income tax withholdings. Wages paid after June 30, 2010 are subject to a table prescribe by the Arizona Department of Revenue. Amounts withheld will no longer be a percentage of federal withholding.

All employees subject to Arizona withholding need to complete a new A-4 or A-4V. The new rates are not automatically applied. Current employees must complete a new Employee’s Arizona Withholding Percentage Election which includes a table to help choose a new withholding rate. The revised form is available from the Arizona Department of Revenue.

A new employee must complete the revised 2009 Arizona Form A-4 within the first five days of employment to elect an Arizona withholding percentage. If the new employee does not complete the revised Arizona Form A-4, the employer must withhold Arizona income tax from the employee’s gross taxable wages at 2.7%.

Resident employees, current or new, who are subject to Arizona income tax withholding, must submit a new A-4 or A-4V as well.


The third group affected by the withholding change is persons collecting annuity or pension payments. These individuals must complete a revised A-4P Form.

The new withholding percentage rates take affect for wages paid after June 30, 2010. The following rates are a percentage of the employee’s gross taxable wages: New AZ withholding rates 1.3% (available to employees whose annual wages are less than $15,000), 1.8%, 2.7%, 3.6%, 4.2% and 5.2%.

Arizona payroll can be made simple with small business payroll software. An automatically updated payroll solution takes the worry and hassle out of such situations as tax table changes. Receive updates, generate payroll, and create checks and payroll reports with Arizona payroll software.



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