Arizona continues to be a low tax and fee state. For 2010, Arizona ranks 46th for combined state and local taxes and fees, a decrease from 43rd in 2009. Looking at the different types of taxes, Arizona’s ranking ranges from 45th for other taxes to 10th highest for general sales taxes. As the table below shows, no state is highest in all types of taxes, nor is any state lowest. Alaska, for instance, ranks highest for corporate income taxes, other taxes and miscellaneous revenues, but ranks lowest for general sales taxes.
20 years of tax cuts mean Arizonans are paying 22% less in taxes per $100 of personal income than we were in 1991. With one exception, Arizona’s legislature has passed tax cuts every year since 1990. The individual income tax rate has been cut by 35%. The corporate income tax rate is currently 25% lower than it was in 1990. It will begin phasing down next year so that by 2018 the corporate income tax rate will be 47% lower than it was in 1990. An increasing number of tax credits for both individual and corporate income tax filers have also reduced tax liability. Only the sales tax has seen an increase as the result of two voter-approved increases – the 0.6% increase directed to K-12 education, passed in 2001, and the temporary 1% increase that became effective in June 2010 and is scheduled to expire in May 2013.