Senate Bill 1185 Employer Information
Mandatory Changes to Arizona Withholding
Revised for wages paid after June 30, 2010.
Senate Bill 1185 (Laws 2009, 1st Reg. Session, Chapter 2) amended the amounts required to be withheld for Arizona withholding purposes. Through June 30, 2010, the amount required to be withheld was a percentage of federal withholding. For amounts withheld on or after July 1, 2010, the amount required to be withheld will no longer be a percentage of federal withholding. Amounts withheld on or after July 1, 2010, must be based on a table prescribed by the department.
The department has prescribed a withholding table based on a percentage of gross taxable wages. "Gross taxable wages" is the amount that meets the federal definition of "wages" contained in IRC § 3401 and that will be included in box 1 of the employee's federal Form W-2 at the end of the calendar year (i.e. gross wages net of pretax deductions, such as the employee's portion of health insurance premiums).
Employees subject to Arizona income tax withholding must fill out a new form that will go into effect on July 1, 2010, and give the completed form to their employer.
Resident employees working in Arizona and nonresident employees subject to Arizona income tax withholding should complete a revised Arizona Form A-4 and give the completed form to their employer.
Resident employees working outside Arizona and already subject to Arizona withholding, should complete a revised Arizona Form A-4V and give the completed form to their employer.
People receiving annuity or pension payments and already subject to Arizona withholding, should complete a revised Arizona Form A-4P and send the completed form to the payor of the annuity or pension.
To ease the transition, the department has included examples on each form to assist employees in making a new election. To assist with the selection of the proper percentage, the department is also providing interactive forms that will "do the math" for the employee.
You may find all of the revised forms on the Withholding Forms page.
Questions and Answers related to SB 1185 are available on the Arizona Department of Revenue's website at www.azdor.gov.
