2025 Tax Year

Arizona Side Hustle Tax Calculator

Calculate your Arizona state tax (2.50%), federal tax, and self-employment tax on 1099 income.

AZ2.50%

7.4 million residents

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2025 rates

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Last updated: January 2026 · Data from IRS Rev Proc 2024-40

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State

W-2 Income (from your day job)

Side Hustle Income *

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Arizona is a rising star for side hustlers, boasting the lowest flat income tax rate in the nation at just 2.5%. Whether you're driving for Lyft in Phoenix, freelancing from Scottsdale, or running an e-commerce business in Tucson, Arizona's tax-friendly environment means you keep more of your hard-earned money.

Arizona Tax Guide

How Side Hustle Taxes Work in Arizona

Arizona has a flat 2.5% income tax rate—the lowest flat rate of any state with an income tax.

**Arizona state tax:** - Flat rate: 2.5% on all taxable income - No brackets—everyone pays the same percentage

**No local income taxes:** - Phoenix, Tucson, and all Arizona cities do not levy income taxes

Arizona's low rate means freelancers here enjoy one of the lowest tax burdens in the country, second only to states with no income tax at all.

Example

What Arizona Side Hustlers Owe

Let's say you're a single filer in Phoenix with a $55,000 W-2 job and $18,000 in side hustle income from freelance graphic design, with $2,500 in business expenses.

**Your estimated taxes on the side hustle:** - Net self-employment income: $15,500 - Federal SE tax (15.3% of 92.35%): ~$2,192 - Federal income tax on side income: ~$3,410 (22% bracket) - Arizona state tax (2.5%): ~$388 - **Total additional tax: ~$5,990**

Compare this to California where you'd pay ~$1,442 more in state taxes.

Important Dates

Arizona Tax Deadlines 2025

Arizona follows federal quarterly estimated tax deadlines: - **Q1**: April 15, 2025 - **Q2**: June 16, 2025 - **Q3**: September 15, 2025 - **Q4**: January 15, 2026

Use Arizona Form 140ES for state estimated tax payments.

Save Money

Common Deductions for Arizona Freelancers

Common deductions for Arizona freelancers include: - Home office expenses - Vehicle mileage (67 cents/mile for 2025) - Software, tools, and equipment - Health insurance premiums - Arizona generally conforms to federal deduction rules

Common Questions

Arizona Side Hustle Tax FAQ

What is Arizona's tax rate on side hustle income?

Arizona has a flat 2.5% income tax rate on all taxable income—the lowest flat rate of any state that has an income tax.

Does Phoenix have a city income tax?

No, Phoenix and all Arizona cities do not have local income taxes. You only pay the state 2.5% flat rate plus federal taxes.

How much can I save in Arizona vs California?

On $15,000 of net self-employment income, you'd pay about $375 in Arizona state tax vs approximately $1,395 in California—a savings of over $1,000 per year.

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