How to File LLC Taxes in Arizona (2026)
Your Arizona LLC's tax form depends on how the IRS classifies it. A single-member LLC reports profit on the owner's personal Arizona Form 140. A multi-member LLC's partnership return goes on Arizona Form 165 instead, split among the owners on their own filings.
An LLC that elects S-corp status files Form 120S, and one that elects C-corp status files Form 120 and pays a flat 4.9% state rate. Every one of these returns goes to the Arizona Department of Revenue.
This page walks through each classification, the current Arizona tax rates, the federal taxes that layer on top, and state-specific rules like the pass-through entity election and the Transaction Privilege Tax that catch new owners off guard.
Quick Summary
- File with both the IRS and the Arizona Department of Revenue. Your LLC's federal classification decides which state form you use.
- Confirm this year's rate on the ADOR site before you file. Rates and forms can change between tax years.
- Talk to a CPA before you elect S-corp or PTET status. Both change your tax bill in ways a general guide can't predict.
Arizona LLC Tax Summary
The table below shows which forms your Arizona LLC files at the state and federal level, based on how it's taxed.
| LLC Type | Federal Form | State Form | Filed With | Filing Deadline & Tax Rate |
|---|---|---|---|---|
| Single-member LLC | Form 1040 (Schedule C) | Form 140 | Arizona Department of Revenue | 2.5% flat rate |
| Multi-member LLC | Form 1065 | Form 165 | Arizona Department of Revenue | March 15; pass-through, 2.5% at owner level |
| S-Corp election | Form 1120-S | Form 120S | Arizona Department of Revenue | April 15; pass-through, 2.5% at owner level |
| C-Corp election | Form 1120 | Form 120 | Arizona Department of Revenue | April 15; 4.9% flat rate |
Arizona State Taxes by LLC Type
By default, the IRS taxes your Arizona LLC based on how many owners it has. One owner makes it a sole proprietorship for tax purposes.
Two or more owners make it a partnership instead. Either way, profits pass through to the owners, and the LLC itself doesn't pay income tax.
Arizona follows this same default, though you can elect S-corp or C-corp treatment instead, which changes both the state return you file and the rate you pay. See our guide to filing LLC taxes for how the federal classification rules work.
1. Single-Member LLCs
A single-member LLC is disregarded for tax purposes. Arizona treats it as a branch of its owner instead of a separate taxpayer.
You report the LLC's profit or loss on Schedule C of your federal Form 1040. You report it again on your Arizona Form 140, at the state's flat individual rate covered later on this page.
If you haven't formed your company yet, see how to start an LLC in Arizona first. You'll also need a registered agent in Arizona on file with the state before any of these tax elections matter.
2. Multi-Member LLCs
A multi-member LLC pays taxes as a partnership. At the state level, the LLC files a partnership return on Arizona Form 165, and each owner then reports their share of the profit or loss on a personal return.
At the federal level, the LLC files Form 1065 and sends each owner a Schedule K-1 for their share of the income.
Both returns are due by the 15th day of the third month after the tax year ends. That's March 15 for a calendar-year LLC, the same deadline as the federal return [1].
3. LLCs Taxed as S-Corp
An LLC taxed as an S-corp still passes profit through to its owners, but it must file its own state return. File Form 2553 with the IRS to make the election, then file Arizona Form 120S with ADOR each year.
The state return is due April 15 for a calendar-year S-corp, the same schedule as Arizona's C-corp return. The entity also files federal Form 1120-S each year to report its income to the IRS.
4. LLCs Taxed as C-Corp
An LLC taxed as a C-corp breaks from pass-through treatment. The entity itself pays tax, and owners are taxed again on any dividends they take.
File Form 8832 with the IRS to elect C-corp status, then file Arizona Form 120 with ADOR and federal Form 1120 with the IRS each year. That's Arizona Form 120, not Form 120S, which is reserved for S-corps.
Arizona taxes C-corp income at a flat 4.9% [2], with the return due by the 15th day of the fourth month after the tax year closes, April 15 for a calendar-year filer.
Arizona Income Tax Rate for Tax Year 2026
Arizona taxes all individual income at a flat 2.5% rate for all income levels and filing status [3]. That's the rate single-member, multi-member and S-corp owners pay on their share of LLC profit.
Federal Taxes Arizona LLC Owners Pay
Beyond state taxes, your Arizona LLC also owes federal taxes. How much depends on your LLC's classification and how many members it has. The two federal taxes that apply to nearly every LLC owner are self-employment tax and income tax, covered below.
1. Federal Self-Employment Tax
Every member who draws profit from the LLC owes federal self-employment tax at 15.3% [4], split between Social Security and Medicare. Arizona doesn't add a separate state-level self-employment tax on top of it.
The 15.3% rate applies to single-member, multi-member and disregarded LLC income alike. If you elect S-corp status, this tax applies only to the reasonable salary you pay yourself. The rest of your profit distributions skip it.
2. Federal Income Tax
All LLC owners owe regular federal income tax on the profit they take from the business, no matter how the LLC is classified. Your total income and filing status set the rate. There's no single flat rate for LLC profit at the federal level.
If you expect to owe $1,000 or more for the year after withholding and credits, pay estimated tax in quarterly installments. The due dates are April 15, June 15, September 15 and January 15 [5].
Missing these dates can trigger an underpayment penalty. That's true even if you pay in full by the return's due date.
Other Arizona Taxes That May Apply
Income tax isn't the only thing your Arizona LLC might owe. Depending on what you sell and whether you hire anyone, you could also owe transaction privilege tax, employer taxes or an industry-specific tax.
1. Transaction Privilege Tax
Arizona's Transaction Privilege Tax (TPT) is its version of a sales tax, charged on the privilege of doing business in the state rather than directly on the buyer. If you sell goods or many services, you likely owe it.
Your combined rate depends on the state rate plus your city and county rates, so it isn't one number statewide. Register for a TPT license and look up your exact combined rate through AZTaxes.gov before you start collecting.
2. Employer Taxes
New employees fill out Arizona Form A-4 to choose their withholding percentage. If they don't return it within five days of hire, you must withhold at the default 2.0% rate until they make an election.
You'll also register for unemployment insurance with the Arizona Department of Economic Security. New employers pay a 2.0% UI rate for at least two years before the state calculates your own experience rate.
3. Industry and Local Taxes
Some industries owe extra Arizona taxes on top of TPT. Adult-use marijuana retailers, for example, pay a 16% state Marijuana Excise Tax on top of regular TPT, reported on its own form [6].
Cities and counties can also layer on their own business licenses and rules. Check with your city clerk or county office for anything specific to your location before you start selling.
Arizona Pass-Through Entity Tax (PTET) Election
Partnerships and S-corps can elect to pay Arizona tax at the entity level instead of passing all of it through to owners [7].
The rate matches the flat individual rate owners would otherwise pay. The election itself doesn't raise or lower the total tax paid.
Owners elect this mainly to get around the federal cap on deducting state and local taxes personally. The entity-level payment isn't subject to that limit.
The entity makes the election by filing its own return. Any owner who doesn't want to participate can opt out before the return is filed.
What Is Deductible for an Arizona LLC
Arizona generally follows federal rules for ordinary business deductions, like wages, rent and supplies. What you deduct on your federal return usually carries over to your state return.
The federal qualified business income deduction under Section 199A is a federal-only benefit. It doesn't reduce your Arizona tax separately.
FAQs
Does Arizona Charge a Separate LLC Franchise Tax?
No, Arizona doesn't charge a separate franchise tax just for existing as an LLC. Your state income tax obligation comes only from the return your LLC files based on its classification.
Do Foreign LLCs Registered in Arizona Owe Arizona Taxes?
Yes, foreign LLCs registered to do business in Arizona owe the same Arizona taxes as domestic LLCs, based on the same classification rules and forms covered above.
Can an Arizona LLC Combine an S-Corp Election With the PTET Election?
Yes, an Arizona LLC taxed as an S-corp can still make the pass-through entity election separately. One changes how profit is classified, the other changes who pays the state directly.
References:
- https://www.irs.gov/instructions/i1065
- https://www.azleg.gov/ars/43/01111.htm
- https://azdor.gov/forms/individual-income-tax-highlights
- https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes
- https://www.irs.gov/faqs/estimated-tax
- https://azdor.gov/transaction-privilege-tax-tpt
- https://www.azleg.gov/ars/43/01014.htm
