Arizona has third lowest state income tax rate for high-wage earners

By Eric Jay Toll  Phoenix Business Journal

Among states with state income taxes, Arizona has the third lowest rate for high-income earners.

Arizona’s top 4.54 percent tax rate kicking in for taxable earnings over $300,000 annually is lower than 46 other states, according to the nonprofit Tax Foundation.

Only North Dakota (2.9%) and Pennsylvania (3.07%) were lower. Pennsylvania collects from all taxpayers at the same rate and North Dakota is for taxpayers earning over $411,500 per year in taxable income. Colorado (4.63%), Illinois (3.75%) and Indiana (3.3%) charge a flat percent of whatever was paid in federal income taxes.

California, the world’s eighth largest economy, has the highest tax rate, 13.3 percent, kicking in at $1 million in taxable income. At $300,000, its rate is 10.3 percent. Minnesota is second highest at 9.85 percent, which starts with the $259,420 bracket, and Iowa is third at 8.98 percent, a rate kicking in with just $69,930 in taxable income.

Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming have no state income taxes.

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