Now is the time for higher-income Arizona taxpayers to start planning for the 3.5% income tax surcharge created by the recent passage of Proposition 208.
The surcharge, which will take effect on January 1, 2021, applies to single filers earning $250,000 or more, and joint filers earning $500,000 or more.
Affected taxpayers should consider increasing their quarterly estimated tax payments to offset the surcharge.
Arizona Form A-4, Employee’s Arizona Withholding Election, is being updated to reflect the surcharge. When Form A-4 is released, affected taxpayers should contact their payroll department to elect the appropriate amount for tax withholding.
The tax surcharge will raise money for educational improvements throughout Arizona including grants to school districts for hiring and maintaining staff, continuing education for school staff, and motivating college students to become teachers in Arizona.
How REDW Can Help
REDW is here to help you with tax matters, including the new tax surcharge. Please contact Senior Manager Craig Neumann to discuss your concerns about how the tax surcharge might affect you and possible planning opportunities related to your individual tax strategy.
REDW is committed to keeping you informed at all times, and especially through the impacts of the COVID-19 pandemic. Stay connected with us on LinkedIn and @REDWLLC on Twitter. Access some of our other updates on our COVID-19 Resource Hub.
