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October 30, 2020

Arizona voters to decide if an income tax increase should apply to high-income individuals

Arizona Proposition 208, which will appear on the 2020 ballot, would impose an additional 3.5% income tax surcharge on individuals with taxable annual income exceeding $250,000 for single and married filing separately and $500,000 for married and head of household filers to fund public education. The change would be effective with respect to taxable years commencing after December 31, 2020.

The initiative was challenged and removed from the ballot in July 2020 by a Maricopa County superior court judge, then reinstated by the Arizona Supreme Court in August 2020. (Secretary of State news release, August 21, 2020.)

The proposition language does not specify whether, if the initiative is approved, employers will be responsible for withholding the additional surcharge.

According to an August 20, 2020 article by the Chamber Business News, if passed by voters in November, the initiative would raise Arizona's top income tax rate by 77.77%.

Arizona Governor Doug Ducey opposes the initiative, writing in an argument submitted for the publicity pamphlet that is sent to voters before the election, that the structure of the initiative would force small business owners to pay "a whopping amount, especially considering that our economy is recovering from recession and high unemployment."


Contact Information
For additional information concerning this Alert, please contact:
Workforce Tax Services - Employment Tax Advisory Services
   • Debera Salam (
   • Kristie Lowery (
   • Kenneth Hausser (


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