Employee Tax Withholding Form A-4 Updated to Reflect Lower Rates.
Arizona's Individual Income Tax Withholding Form (Arizona Form A-4) has been updated to reflect Arizona's lower individual income tax rates. Every Arizona employer is required to make this form available to its Arizona employees by January 31, 2023. The new Form A-4 has seven new withholding election rate boxes while retaining both the zero withholding rate option and the line for additional Arizona withholding. If an employee fails to fill out the new Form A-4, the default rate will be 2.0%. Do not send these withholding forms to the Department; the forms should be kept by the employer and the employee with their tax records.
The new form can be found on ADOR's website at www.azdor.gov.
Frequently Asked Questions:
Why is Form A-4 changing?
Arizona's individual income tax rates were substantially reduced starting with the new 2022 tax year. The previous Form A-4 withholding rates are no longer representative of the new lower income tax rates.
What if the employee does not update their old Arizona Form A-4?
The employer should select 2.0% on behalf of the employee. The new default Arizona withholding rate is 2.0%.
What if the employee wants their Arizona taxes to be overwithheld?
Employees will still have the option of selecting a higher Arizona withholding rate than their wages might dictate, and there is still a line to add an additional amount of Arizona withholding.
What are the tax rates in 2022 and 2023?
For the tax year 2022, there are two individual income tax rates: 2.55% and 2.98%. The new flat tax 2.5% will affect the 2023 tax year.
Does the employer have to wait until January 2023 to implement this change?
No, implementation of the new Form A-4 can begin immediately.
What should the employer do with the new completed A-4 forms?
The employer should retain the A-4 with their employee and tax records. The employee may want to retain a copy for their records as well. Do not send the Form A-4 to the Arizona Department of Revenue.