Talk to your employer about how to make that happen. If you want to change this percentage, you can do so at any time during the year. The new default withholding rate for AZ is 2 percent, so now is the time to review if this amount is appropriate for you. What does this mean for you? Changes to the 2023 tax rate structure mean changes to state withholdings from your paychecks. Vertical equity: Taxpayers with more income should pay a higher tax Opponents of a flat tax argue that it violates the concept of vertical equity (where taxpayers with more income should pay a higher tax). Doug Ducey notified the Department of Revenue to implement the flat tax for 2023 after state budget officials calculated the 2022 general fund revenue at 16.7 billion. And that ranking came out before the announcement that the tax relief package would take effect a year earlier than expected. Proponents of a flat tax also tout that the tax saves taxpayers’ money. In fact, according to the American Legislative Exchange Council’s (ALEC) 2022 Rich States, Poor States report Arizona ranks third among all 50 states in economic outlook, thanks in large part to the flat tax law. Potential benefits of a flat tax include greater efficiency, as it eases compliance for both taxpayers and the state. Under a graduated structure, the tax rate varies based on the taxpayer’s income-the more money you earn, the higher rate of taxes you pay. A flat tax applies the same tax rate to all taxpayers, regardless of the taxpayer’s income. Tax rate structures can be characterized in one of two ways-flat or graduated. Franke College of Business, broke it down for The NAU Review. Franke College of Businessĭid you know that in 2023, Arizona waved goodbye to its progressive tax rate structure and adopted a flat tax rate of 2.5 percent? So, what does that mean for you and your 2024 tax filing? Look no further! Landi Morris, assistant professor of accounting in The W. The views expressed reflect the authors’ own personal perspectives.Īssistant professor of accounting, The W. *Editor’s Note: The “Views from NAU” blog series highlights the thoughts of different people affiliated with NAU, including faculty members sharing opinions or research in their areas of expertise.
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