AZ's flat-tax advantage
At 2.5% flat, Arizona undercuts every neighboring state that taxes income: CA tops out at 13.3%, NM at 5.9%, NV has no tax but lower salaries in many sectors. A $100K earner pays ~$2,100 in AZ state tax vs. ~$5,300 in CA.
Phoenix cost-of-living math
Phoenix median home prices (~$450K in 2025) rose faster than wages post-2020. The 2.5% state tax helps, but property insurance and cooling costs rose sharply — run total cost of living, not just tax, when comparing offers.
Remote workers relocating to AZ
If you keep a CA salary while living in AZ, CA may still claim tax on days worked in CA. Pure AZ residency + AZ work means only the 2.5% flat rate applies — a common remote-work arbitrage.
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Read the guideFAQ
Is Arizona really a flat-tax state now?
Yes. Since 2023, all AZ taxable income is taxed at a flat 2.5%, replacing the old graduated system that topped at 4.5%.
Does Arizona tax Social Security?
No. Arizona fully exempts Social Security benefits from state income tax.
Do Phoenix or Tucson have city income tax?
No. Arizona cities levy sales tax but no local income tax on wages.
Living in the five boroughs changes the answer — the New York City paycheck breakdown adds the city resident tax on top of state withholding.
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