Arizona State Tax Percentage Change

We just released a new update for all customers with employees with an Arizona residence. The Arizona Legislature recently passed a bill that reduces individual income tax rates (Senate Bill 1828) beginning in 2023. Starting on January 1, 2023 the default rate for employees is 2.0% unless the employee has elected a different percentage or does not complete the form. Employers are required to make Arizona Form A-4 available to all Arizona employees by January 31, 2023.

As a result, the new 2.0% default rate is set for any employee who did not select a different 2023 percent rate after the new year. Your employees will still have the option to change their state tax withholding under that Pay Info tab in BambooHR if they would like to change their state tax withholding percentage.

Important Note: Payrolls with a pay date after January 1, 2023 and that were approved prior to December 29, 2022 processed with an employee’s existing Arizona percent option as of the date the payroll was approved and not the new default percentage (2.0%).

Please visit the below links regarding this change and to download the Arizona Form A-4.

• Arizona Department of Revenue: Arizona’s Employees Have New Tax Withholding Options
• New Arizona Form A-4

We hope you are as excited about this product update as we are. We are confident that it will make your job a little easier and set you free to do great work. If you are looking for more information regarding this update, make sure to check out these Help Articles that explains more about how to use this new update.