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 A-4 form 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 A-4 form, the default rate will be 2.0%. Do not send these withholding forms to the Department, they should be kept by the employer and the employee with their tax records.    

The new form can be found on ADOR’s website here. 

Frequently Asked Questions:

Why is Form A-4 changing?
Due to passage of Senate Bill 1828 by the Arizona Legislature in the 2021 session, Arizona’s individual income tax rates were substantially reduced starting with the 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 percent on behalf of the employee. The new default Arizona withholding rate is 2.0 percent.   

What if the employee wants their Arizona taxes to be over-withheld?
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 tax year 2022, there are two individual income tax rates, 2.55 percent and 2.98 percent. The new flat tax of 2.5 percent will affect the 2023 tax year—which is filed by April 2024. The tax year 2022 tax table will be posted online in December 2022.

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 new A-4 Form to the Arizona Department of Revenue.  

If the employer uses a substitute electronic A-4 form for their employees (rather than a paper A-4) can the electronic form simply be updated to reflect the new withholding rate percentages? 
Yes.

Determining the withholding percentage that is best for you is, in part, a factor of the other types of income you have in addition to wage income. Contact your R&A professional for the guidance you need for your unique situation.