SB 1358
Initials VP/MG Page 1 Transmitted to the Governor
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature
Second Regular Session
Senate: FICO DP 5-0-2-0 | 3
rd
Read 27-0-3-0-0
House: WM DP 9-0-0-1 | 3
rd
Read 58-0-1-0-1
SB 1358: income tax withholding; retirement distributions
Sponsor: Senator Mesnard, LD 13
Transmitted to the Governor
Overview
Allows an individual receiving distributions from a pension or retirement account to request
to withhold Arizona income tax.
History
Any payment of an amount as retired or retainer pay for service in the military or naval
forces of the U.S., or payments received under the U.S. civil service retirement system from
the U.S. government service retirement disability fund or a payment of any other annuity to
an individual may be requested by the individual for the payment to be subject to withholding
from Arizona income tax. This payment must be treated as if it were a payment of wages by
an employer to an employee for a payroll period (A.R.S. § 43-404).
Every employer at the time of the payment of wages, salary, bonus or other emolument to
any employee whose compensation is for services performed in Arizona must deduct and
retain from the compensation amount prescribed by tables adopted by the Department of
Revenue (DOR). An employer may voluntarily elect to not withhold tax during December by
notifying DOR on a DOR-prescribed form and the employer's employees in writing in a
manner prescribed by DOR. An employer cannot withhold tax on the wages of the employer's
nonresident employees in Arizona on a temporary basis for the purpose of performing disaster
recovery from a declared disaster during a disaster period (A.R.S. § 43-401).
Provisions
1. States that a distribution from a pension or retirement account may be subject to Arizona
income tax withholding, and is treated as if it were a payment of wages by an employer
to an employee for a payroll period. (Sec. 1)
2. Requires a request for the income tax withholding to be made by the payee to the person
making the distributions. (Sec. 1)
3. Allows the person making the payment or distribution to deny or terminate the request
with a written statement. (Sec. 1)
4. Limits the withholding amount to the extent that amount is includable in the Arizona
gross income of the individual who receives the distribution. (Sec. 1)
5. Instructs any request to initiate, adjust or terminate withholding to be executed in
writing by paper or electronic form prescribed by DOR. (Sec. 1)
6. Defines pension and retirement account, and modifies the definition of annuity. (Sec. 1)
☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note