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Taxes

Mesa, Arizona offers a competitive operating environment compared to other Southwest markets. For more than a decade, Arizona has implemented reductions in taxes and created incentive programs favorable to businesses.

ARIZONA TAX QUICK FACTS

  • Arizona has the 13th lowest unemployment insurance tax rate in the nation and the lowest amount in the U.S. for total wage base subject to unemployment tax ($7,000).
  • The assessment ratio for real and personal property taxes on commercial and industrial properties is 18.0%.
  • Arizona has one of the most aggressive additional depreciation schedules, resulting in reduced operating costs and a quicker path to profitability.
  • Arizona also exempts equipment used in manufacturing from sales tax.
  • Virtually all services are exempt from sales tax.
  • 100% of net operating loss may be carried forward for five years.

Plus, the state DOES NOT levy the following taxes:

  • Corporate franchise tax.
  • Business inventory tax.
  • Income tax on dividends from out-of-state subsidiaries.
  • Worldwide unitary tax.

BUSINESS TAXES

Business Taxes
Sales Tax* Corporate Income Tax Unemployment
(% of Payroll)
Taxable
Wage Base 
Worker's Comp
(per $100 payroll) 
Inventory
 8.30% 4.9% 2% $7,000 $0.88 No
 *2020 sales tax breakdown: Mesa - 2%; County - 0.7%: State - 5.6%


PERSONAL INCOME TAX

Arizona personal income tax rates ranges from 2.59%-4.50%, compared to other Southwest markets, which range from 4.6% to 9.3%.

 

PROPERTY TAX

The assessment ratio for commercial property is 18% of the limited property value (LPV), as determined by the Maricopa County Assessor. The property tax is composed of two rates, primary and secondary. Primary tax rates typically fund government entities like municipalities and school districts, while secondary tax rates usually fund special districts and bond issuances. The rates in the following table are per $100 of assessed value. The rate is then multiplied by the assessed value to determine the tax liability. For example**, a commercial property within Mesa Public School District with an LPV of $100,000 would pay $2182.00 annually in property tax. $100,000 LPV x 0.18 (assessment ratio) = $18,000 x $12.1222/$100 = $2182.00. A commercial property within the same district with an LPV of $500,000 would pay $10,910.00 annually in property tax.

 

Primary Tax Total
(Rate/100)*    

Secondary Tax Total (Rate/100)* Total Nominal Tax Rate(Rate/100)*  Total Effective Tax Rate 
   Mesa Public School District** 7.2132 4.909  12.1222  2.18% 
   Higley Unified School District  
 6.8772 5.3167  12.1939  2.19% 
   Queen Creek Unified School District 7.1181 5.476  12.5941  2.27% 
   Gilbert Public School District 6.8796 4.1633  11.0429  1.99% 

 *Rates do not include some special districts, which may vary across the City.
Source: Maricopa County Assessor's Office Map

 

Last updated 1/29/2020