Arizona State Tax Routine (AZTX)

Currently Arizona utilizes the federal tax calculation to determine the state tax withholding for regular payroll runs. The Arizona State Tax Routine ensures that the calculation used to calculate Arizona tax for Supplemental Payrolls (By-Pay-Type, Multiple Payments, and Retroactive) are Gross Taxable Wages * the Deduction Percent on Deduction Plan (DPLN) for the deduction.

Data Setup Considerations

Sites will need to ensure they have implemented the following Business Process/Data Setup changes when establishing Arizona tax deductions.

Tax Marital Status (TAXM) Setup for Arizona State Tax Deductions:

Arizona allows employees to choose the percent at which taxes are withheld from their gross taxable wages. In order to support this, sites need to create entries on TAXM that correspond to each percent option available.

For example, if the percent options are 0.8%, 1.3% and 1.8%, three TAXM entries should be created.

Tax Parameters (TAXP) Setup for Arizona State Tax Deductions

TAXP entries should be created for each Tax Marital Status that has been created for Arizona Tax. There is no setup needed in the Exemption Amount, Standard Deduction, or Annual Gross Amount fields.

Marginal Tax Rates (DEDX) Setup for Arizona State Tax Deductions

One DEDX entry should be created for each Tax Marital Status that has been created for Arizona Tax.
The Standard/Higher Withholding Rate CVL should be set to Standard Withholding Rate for all entries.
The Income Level Amount and Base Tax Amount should both be 0 for all entries.
The Tax Rate Percent should be the percent option associated with the Tax Marital Status. For example, if Tax Marital Status 1 represents percent option 0.8% the Tax Rate Percent for the corresponding DEDX entry should be 0.008.

Employee Tax Parameter (TAX) enrollment (Note: this only applies to employees enrolled in a Tax Class (TAXC) that includes an Arizona State Tax Deduction).

State Tax Allowances are not used for Arizona State Tax processing.