Arizona Revises the Income Tax Withholding Rates for 2009
The Arizona Department of Revenue (DOR) has revised the Income Tax Withholding rates for 2009, which will increase the withholding tax calculations. This change is included in Senate Bill 1185, which was approved by the Legislature and signed by Governor Brewer on April 9, 2009. The updated Income Tax Withholding rates are effective May 1, 2009 through December 31, 2009. Click here to see the information published by the DOR.
Frequently Asked Questions
How do I know if I'm affected?
You may be affected if you currently withhold Arizona income taxes from employees and make withholding tax payments in the State of Arizona or if you currently have a valid Arizona Department of Revenue Employer Identification Number.
What is changing?
The Income Tax Withholding rates are changing effective May 1, 2009 through December 31, 2009 as follows:
The rate of 10% is changed to 11.5%
The rate of 19% is changed to 21.9%
The rate of 23% is changed to 26.5%
The rate of 25% is changed to 28.8%
The rate of 31% is changed to 35.7%
The rate of 37% is changed to 42.6%
If an employee does not submit a new Form A-4 or A-4V electing one of the new Income Tax Withholding rates, you will need to select a new Income Tax Withholding rate that corresponds with the employee’s Income Tax Withholding rate elected on the last Form A-4 or A-4V submitted.
When will these changes be available in QuickPayroll?
Intuit QuickPayroll will modify the Income Tax Withholding rates in the next Payroll Update, #20912, to be released at the end of April 2009.
What do I need to do?
You will need to download and install Payroll Update #20912 as soon as it is released, and select the new Withholding Rate for each applicable employee, so the correct amount of Arizona withholding taxes will be calculated and withheld from employee paychecks from that date forward.
Prior to downloading and installing Payroll Update #20912, print an Employee Withholding report in order to determine the new Income Tax Withholding rate to select for each employee:
- From the Reports menu, select List Reports, select Employee, and then select Withholding.
- Click on Customize, select State Miscellaneous 1, and then click OK. The State Miscellaneous 1 column will display the current Income Tax Withholding rate set up for each applicable employee.
- Print the report.
After you have downloaded and installed Payroll Update #20912, you will be required to select one of the new Income Tax Withholding rates for each applicable employee in order to have Arizona income tax withheld from the employee’s pay:
- From the Lists menu, select Employees.
- Double click on an applicable employee, select Payroll Info tab, and then click on the Taxes tab.
- Click on the State tab and then select the applicable Withholding Rate in the drop down selection under the Miscellaneous Data section. (Note the Withholding Rate listed on the Employee Withholding report created prior to installing Payroll Update #20912, and select the corresponding new Withholding Rate based on the rate change information indicated in the What is Changing? section of this notification. The prior Withholding Rate is also indicated in the Previous State Data section, which is located below the Miscellaneous Data section.)
- Repeat the steps above for each applicable employee.
IMPORTANT: If no new Withholding Rate is selected, the Withholding Rate will default to (none) and no Arizona withholding tax will be calculated or withheld from the applicable employee’s paycheck.
