Arizona Bonus Tax Calculator:
Employers' Trusted Tool for Accurate Bonus Payments
The Arizona bonus tax calculator available on this page utilizes the state’s flat supplemental tax rate, making it simple for employers to figure out the net pay (or take-home pay) an employee should receive for wage payments such as bonuses.
Does Arizona Tax Bonuses?
Yes, Arizona considers bonuses part of taxable wages and taxes them using its standard withholding rates. However, when bonuses (or other supplemental wages) are paid separately from an employee’s regular wages—and income tax has already been withheld from those regular wages—employers may use the flat Arizona rate of 2.5% for state withholding.
You can use the calculator above, powered by Beyond, to estimate this specific rate calculation.
How to Calculate Bonus Tax in Arizona
Supplemental wages—including bonuses, commissions, overtime pay, back pay, and non-deductible moving reimbursements—are usually combined with regular wages and taxed using Arizona’s standard withholding method.
If supplemental wages are processed:
– Combined with regular wages in a single payment (and not itemized separately): calculate withholding as if the total amount were a single wage payment.
– Paid separately: calculate withholding as if the supplemental wages were added to the employee’s most recent or current regular payroll period, or use the flat 2.5% Arizona rate.
Key Information on Arizona Bonuses
How Are Bonuses Paid in Arizona?
In Arizona, employers can issue bonuses via:
– Check
– Direct deposit
– Pay card
How Do Bonuses Work?
Bonuses are treated as regular income, subject to federal and state withholding, and are reported on the employee’s Form W-2 at the end of the year.
What Is the Arizona Bonus Tax Rate?
Arizona’s individual income tax rate is a flat 2.5% as of 2023 and later.
This flat rate can be used for separately paid bonuses when regular wage withholding has already occurred.
The calculator on this page uses that 2.5% rate for Arizona supplemental payments.
Are Bonuses Taxed Differently Than Standard Pay?
No—Arizona applies the same withholding rates to bonuses and other forms of compensation.
How Much Tax Is Taken Out of a Bonus?
The total combined withholding can be up to 2.5% state + 22% federal = 24.5%.
The 22% federal rate is the standard flat rate used for supplemental wages (bonuses) up to $1 million.