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%.
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