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Navigating Arizona Payroll Taxes
While meeting federal payroll tax obligations is crucial, staying compliant with Arizona’s state-level requirements is just as important for your business.
This guide covers everything you need to know about Arizona payroll taxes, including key forms, filing deadlines, and
reporting procedures.
Arizona New Hire Reporting
Employers in Arizona are required to report newly hired and rehired employees to the Arizona New Hire Reporting Center.
This requirement helps the state and federal governments enforce child support, prevent fraud, and maintain accurate employment records.
Who must report
All Arizona employers — public, private, nonprofit, and government — must report newly hired and rehired employees. Reporting is required under Arizona law and federal law. See the Arizona DES employer guidance.
What to report
- Employer details: Employer name, address, FEIN (or other employer ID).
- Employee details: Name, address, Social Security number.
- Hire Date: Date of hire (or re-hire).
When to report
Reports must be submitted within 20 days of the employee’s hire or re-hire date (Arizona Revised Statute 23-722.01)
How to report
Arizona accepts new-hire submissions via the channels authorized by the Department of Economic Security. Common methods include:
1. Online (Recommended):
- Visit the Arizona New Hire Reporting Center.
- Register with your FEIN or employer ID and contact details.
- Complete and submit the new hire or rehire information electronically.
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2. Fax:
- Download the Arizona New Hire Reporting Form (PDF)
- Complete all the required information on the form.
- Fax it to: (888)-282-0502
Retain a copy of the fax confirmation for your records
3. Mail:
Complete the Arizona New Hire Reporting Form and Mail it to:
Arizona New Hire Reporting Center
PO Box 138003
Sacramento, CA 95813-8003
Use certified or trackable mail for proof of delivery.
New Hire Reporting Penalties
The fine can be up to $25 per newly hired employee, and can be increased up to $500 if the employer and employee conspire to avoid reporting.
Arizona New Hire Corrections
If you’ve made an error in your Arizona New Hire Report—such as incorrect employee information or a mistakenly reported hire—you can correct it by submitting a new report with the accurate details.
Arizona requires that corrections or deletions be submitted directly to the Arizona New Hire Reporting Center. You can:
- Submit the corrected record through the online portal, or
- Contact the Arizona New Hire Reporting Center via phone at (888) 282-2064 or by fax at (888) 282-0502 to request removal of an incorrectly reported employee.
Always include your FEIN, employer name, and a clear note identifying the correction to ensure proper handling.
Arizona Withholding Forms (A1-QRT & A1-R)
Arizona employers must file withholding returns with the Arizona Department of Revenue (ADOR) to report Arizona income tax withheld from employee wages and reconcile payments made during the year.
Who Must File
All employers who withhold Arizona income tax from employee wages must file the appropriate withholding returns with ADOR. The Department assigns deposit frequency (quarterly, monthly, semiweekly/next-day) based on withholding volume. See the ADOR withholding forms page.
Even if no Arizona income tax is withheld during a reporting period, you must still file the required withholding returns (A1-QRT or A1-R) if you have an active withholding account with the Arizona Department of Revenue (ADOR). Failure to file on time may result in penalties and interest.
Form Types
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Form A1-QRT: Arizona Quarterly Withholding Tax Return
Used to report and reconcile Arizona income tax withheld and deposits for the quarter. (Form A1-QRT must be filed each quarter — Apr 30, Jul 31, Oct 31, Jan 31.)
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Form A1-R: Arizona Withholding Reconciliation Tax Return
Annual reconciliation that reconciles total tax withheld during the year with amounts paid; typically filed once per year (due on or before January 31). Employers who file A1-QRT are required to file A1-R.
What to Report
- Employer information (name, address, FEIN)
- Total wages paid during the reporting period (quarter or year)
- Total Arizona tax withheld and deposits made (and any adjustments or credits)
On A1-R, include W-2 / 1099 reconciliation as required by ADOR.
When to File
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A1-QRT (quarterly): Due by the last day of the month following the quarter (Q1 → Apr 30, Q2 → Jul 31, Q3 → Oct 31,
Q4 → Jan 31). - A1-R (annual reconciliation): Due on or before January 31 (check current year instructions). Electronic filing requirements apply unless a waiver is granted.
How to File
Employers in Arizona have several methods to submit their withholding tax forms to the Arizona Department of
Revenue (ADOR):
1. Online (Preferred):
- Register for an account at AZTaxes.gov.
- Federal Forms Submission: Submit state copies of federal Forms W-2, W-2c, W-2G, and 1099 reporting Arizona income tax withheld.
- Payment: Make electronic payments through AZTaxes.gov.
Electronic filing is mandatory unless a waiver is granted.
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2. By Mail:
- Download the necessary forms from the ADOR Withholding Forms page.
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Complete the forms and mail them to:
Arizona Department of Revenue
1600 West Monroe Street
Phoenix, AZ 85007 - Include a check or money order for any tax due.
Keep copies of all submitted forms and payments for your records.
Penalties
Employers in Arizona must file and pay state income tax withholding on time using Form A1-QRT (Arizona Quarterly Withholding Tax Return). Missing filing deadlines or failing to pay the required withholding tax can lead to penalties and interest under Arizona law and guidance from the Arizona Department of Revenue (ADOR).
If You File Late
- If you do not file your A1-QRT return by the due date, a late filing penalty will be assessed.
- This penalty is 4.5% (.045) of the tax required to be shown on the return for each month or part of a month that the return is late.
- The maximum late filing penalty is 25% (.25) of the tax due.
If You Pay Late
- If you file the return but fail to pay the withholding tax by the due date, a late payment penalty will apply.
- This penalty is 0.5% (.005) of the unpaid tax per month or part of a month, charged from the original due date until the tax is paid.
- The maximum late payment penalty is 10% (.10) of the unpaid tax.
Arizona Withholding Corrections
If you discover an error on your A1-QRT (Quarterly Withholding Tax Return) or A1-R (Annual Withholding Reconciliation)—such as overreported or underreported wages, tax withheld, or payment amounts—you are required to file an amended return with the Arizona Department of Revenue (ADOR).
-
How to amend:
- Online: Submit the corrected return via AZTaxes.gov or AZ Web File for electronic corrections.
- By Paper: Complete a new A1-QRT or A1-R form marked “Amended” and mail it to the ADOR office.
- Adjustments: Amended returns can also include corrections for previously underpaid or overpaid taxes, ensuring your account balances accurately with ADOR records.
Arizona Unemployment Insurance (UI) Reporting — Form UC-018
Arizona employers are required to report unemployment contributions using Form UC-018, administered by the Arizona Department of Economic Security (DES).
This ensures the state's unemployment insurance fund is accurately maintained, supporting benefits for employees who are out of work.
Who Must File
All Arizona employers with one or more employees must file the UC-018 form. This includes businesses of all sizes, nonprofit organizations, and government agencies required to report and pay unemployment insurance contributions.
You must file the UC-018 even if no wages were paid during the quarter.
Taxable Wage Base & Rates
The Unemployment Insurance (UI) tax is calculated based on a specific wage base and your assigned tax rate.
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Annual Wage Base
For 2025, the Arizona unemployment insurance taxable wage base is $8,000 per employee. Wages above this amount are not taxed for unemployment insurance purposes. Learn More
-
Contribution Rate
Rates are assigned annually by the Arizona DES and vary depending on the employer’s experience rating. New employers are generally assigned a standard rate of 2.0%. Learn More
What to Report
Employers must report the following on the UC-018 form:
- Employee Wages: Total wages paid to employees during the reporting period.
- Employer Details: Employer’s name, address, and Arizona UI account number.
- Quarterly Report Data: Total wages subject to unemployment insurance and the contribution owed.
When to File
The UC-018 form is filed quarterly. The filing deadlines are as follows:
- Q1 (Jan-Mar): Due April 30
- Q2 (Apr-Jun): Due July 31
- Q3 (Jul-Sep): Due October 31
- Q4 (Oct-Dec): Due January 31 of the following year
How to File
Employers have multiple options for filing the UC-018:
1. Online (Recommended):
- Visit the Arizona Unemployment Tax and Wage System (TWS).
- Register or log in to your account.
- Complete the UC-018 form with employee wages and contribution details.
- Submit the form electronically—this reduces errors and ensures timely submission.
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2. By Mail:
- Download the UC-018 form from the DES website
- Complete all employer and wage details
-
Mail the completed form to:
Arizona Department of Economic Security
Unemployment Insurance Tax Office
P.O. Box 6028
Phoenix, AZ 85005-6028
3. By Fax:
- Fax the completed form to: (602) 771-0991.
- Keep a copy of your fax confirmation for proof of submission.
Tax Payments
The UC-018 form itself does not require direct payment submission.
Employers must remit unemployment insurance contributions separately through the DES’s electronic payment system (EFT) or other approved methods.
Arizona Unemployment Insurance Penalties
In Arizona, employers are required to file quarterly unemployment wage and tax information using Form UC-018 (Unemployment Tax and Wage Report). Failure to file this report on time or to pay the associated unemployment taxes may result in penalties and interest under guidance from the Arizona Department of Economic Security (DES).
Late Filing Penalty
- If the UC-018 report is filed after the due date, a late filing penalty will be assessed.
- This penalty is 0.10% (.001) of the total wages reported (Line 1), with a minimum penalty of $35 and a maximum penalty of $200.
Late Payment / Underpayment Interest
- If the unemployment tax is not paid by the due date, interest is charged on the unpaid amount.
- Interest is assessed at 1% per month (or part of a month) on the amount of tax due until payment is made.
Arizona Unemployment Corrections
- If you discover an error on your UC-018 form, such as incorrect wages or misreported contributions, a corrected form must be submitted.
-
Corrections should be made as soon as possible, preferably before the next quarter’s filing, to avoid potential
fines or penalties. - Contact the Arizona Department of Economic Security (DES) for guidance on resubmitting corrected UC-018 forms.
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| Forms | Price per Form* |
|---|---|
| Withholding Form (A1-QRT) | $5.95 |
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Frequently Asked Questions
What is the Arizona New Hire Reporting requirement?
Employers must report all newly hired or rehired employees to the Arizona New Hire Reporting Center within 20 days of their hire date. This can be done electronically via the Arizona New Hire Reporting Center, by fax, or by mail. The information helps enforce child support orders and detect fraudulent unemployment claims.
How do I report new hires in Arizona?
You can report new hires through the Arizona New Hire Reporting Center by providing details such as the employee's name, Social Security number, address, and the date they first performed services for pay. Reports can be submitted electronically, by fax, or by mail.
What is the Arizona Form A-4, and who needs to complete it?
Arizona Form A-4 is the Withholding Percentage Election form. All new employees must complete this form within five days of employment to determine the amount of state income tax to withhold from their wages. If an employee fails to submit the form, the default withholding rate is 2.0%.
How do I file Arizona withholding tax returns?
Arizona Form A1-QRT can be filed online through the Arizona Department of Revenue's e-Services portal. Employers can also file by mail by downloading the form from the same website.
What is the Arizona unemployment insurance taxable wage base?
For 2025, the taxable wage base for Arizona unemployment insurance is $8,000 per employee. This means unemployment insurance taxes are applied only to the first $8,000 of each employee's wages.
How do I report wages and pay unemployment insurance taxes in Arizona?
Employers must submit quarterly Unemployment Tax and Wage Reports (UC-018) through the Arizona Unemployment Tax and Wage System. Even if no wages were paid, reports must be filed to maintain an active account.
What are the penalties for late filing or payment of Arizona withholding taxes?
A late filed return is assessed a penalty of 4.5% of the tax due per month or any fraction of a month that elapses between the due date and the date the return is filed, up to a maximum of 25%. A late payment is assessed a penalty of 0.5% per month, up to a maximum of 10%.
How do I correct errors on previously filed Arizona unemployment tax reports?
To correct errors on a UC-018 form, submit a corrected report through the Arizona Unemployment Tax and Wage System. Adjustments must be made in the correct quarter, and negative amounts should not be used on subsequent reports.
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