Arizona Small Business Tax Guide — 2026
Income Tax Rate
2.5% flat rate
Sales Tax Rate
5.6% state + local (total typically 7% — 11%)
Filing Deadline
April 15 (matches federal deadline)
Arizona Income Tax
Arizona imposes a state income tax with rates of 2.5% flat rate. Self-employed individuals, freelancers, and sole proprietors pay this tax on their net business income in addition to federal income tax and federal self-employment tax (15.3%).
Self-Employment in Arizona
Arizona imposes a flat 2.5% income tax on net business income. Self-employed individuals also pay the standard federal SE tax. Arizona offers a small business income tax election for pass-through entities.
Estimated Tax Requirements
Quarterly estimated payments required if you expect to owe $1,000 or more. Due dates: April 15, June 15, September 15, January 15.
ArizonaDeductions & Credits
- Arizona conforms to many federal deductions
- Subtraction for U.S. government pension income
- Credit for taxes paid to other states
- Small business income tax option for pass-through entities
Business Filing Fees
LLC: $50 formation + no annual report fee (just publication requirement). Corporation: $60 formation + $45 annual report.
Key Facts About Arizona Taxes
- Arizona moved to a flat 2.5% income tax in 2023 — one of the lowest in the nation
- Transaction Privilege Tax (TPT) is Arizona's version of sales tax, paid by the seller
- LLC publication requirement: must publish articles of organization in a local newspaper
- Arizona does not tax Social Security benefits
Track Your Arizona Business Expenses
TaxTidy helps Arizona freelancers and self-employed individuals track every business expense with AI-powered receipt scanning. Snap a photo of any receipt and TaxTidy instantly extracts the vendor, amount, and tax category — then maps it to the correct IRS Schedule C line. At tax time, generate an audit-ready PDF report with all your deductions organized and totaled.
Frequently Asked Questions
What is Arizona's income tax rate for self-employed individuals?
Arizona has a flat 2.5% income tax rate on all taxable income, including self-employment income. This is one of the lowest rates in the country.
Does Arizona have a separate business tax for freelancers?
No separate business tax, but you may need to collect Arizona Transaction Privilege Tax (sales tax) if you sell taxable goods or certain services. The state rate is 5.6% plus local additions.
When are Arizona estimated tax payments due?
Quarterly on April 15, June 15, September 15, and January 15. Required if you expect to owe $1,000 or more in Arizona income tax.
Official source: Arizona Department of Revenue
TaxTidy provides expense organization tools based on the most current US tax law available to it. TaxTidy is not a CPA, Enrolled Agent, or licensed tax professional. All categorizations, deductions, and tax calculations are estimates. Please verify all data for accuracy and consult a certified tax professional before filing.
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