PHOENIX — Arizona legislators on Thursday approved emergency legislation to boost Arizona’s income-tax withholding percentages so a taxpayer’s state withholding doesn’t change with a reduction in federal rates.
Arizona withholding is based on a percentage of the federal withholding rate. A federal reduction included in the economic stimulus law would have automatically cost the state $73 million in revenue in the fiscal year that ends June 30.
The bill approved Thursday would hike the state’s withholding percentages temporarily. That won’t change the amount taken from a worker’s paycheck before the federal change that took effect on Wednesday. The state would set its own withholding rate starting next year.
The legislative action will send the bill to Gov. Jan Brewer.