PHOENIX — Gov. Jan Brewer on Thursday signed into law emergency legislation raising Arizona’s income-tax withholding percentages so a taxpayer’s state withholding doesn’t change with reduced federal rates.
Arizona has based state withholding on percentages of federal withholding. Because of reductions in federal rates included in the economic stimulus law, Arizona would have lost $73 million in revenue in the fiscal year ending June 30. The state would have eventually gotten the money when tax returns were filed in 2010.
The bill approved by the Legislature April 2 hikes the state’s withholding percentages temporarily to keep them from dropping in lockstep with the federal change that took effect April 1.
The state will set its own withholding rates in 2010.