Selling a business in Arizona: what the state takes (2026)
Arizona’s top individual income tax rate is 2.5%. Here is what an owner selling company stock pays, with 2026 rules from official sources and worked examples at $10 million, $25 million and $50 million.
- 2.5%
- Top Arizona income tax rate (2026)
- $468,750
- State tax on a $25M long-term gain
- 25.7%
- Combined federal and state rate on $25M
- 40 of 51
- Rank by total tax on $25M (1 = highest)
How Arizona taxes a business sale
- Income tax
- Top rate 2.5%: Flat 2.5% on all taxable income.
- Long-term capital gains
- Flat 2.5% rate. Arizona subtracts 25% of net long-term capital gain from assets acquired after December 31, 2011 (ARS 43-1022(22)(c)), making the effective rate 1.875%. Stock acquired before 2012, including most founder shares in companies started before 2012, gets no subtraction and is taxed at the full 2.5%. Assets with an undeterminable acquisition date are treated as acquired before 2012.
- Relief that applies only in some sales
- ARS 43-1022(21) allows a 100% subtraction of net capital gain from an investment in a qualified small business certified by the Arizona Commerce Authority under ARS 41-1518 (the angel-investment program). It rarely applies to a founder's own operating company.
Three worked examples
| Long-term gain | $10,000,000 | $25,000,000 | $50,000,000 |
|---|---|---|---|
| Federal capital gains tax (20%) | $2,000,000 | $5,000,000 | $10,000,000 |
| Net investment income tax (3.8%) | $380,000 | $950,000 | $1,900,000 |
| Arizona tax | $187,500 | $468,750 | $937,500 |
| Total tax | $2,567,500 | $6,418,750 | $12,837,500 |
| Effective combined rate | 25.67% | 25.67% | 25.67% |
| Net proceeds after tax | $7,432,500 | $18,581,250 | $37,162,500 |
| Extra tax versus Texas | $187,500 | $468,750 | $937,500 |
Seller’s tax calculator
Estimate federal and state tax on a stock sale and what is left before fees and debt.
- Long-term capital gain
- $25,000,000
- Federal capital gains tax (20%)
- $5,000,000
- Net investment income tax (3.8%)
- $950,000
- Arizona tax
- $468,750
- Gain excluded or deducted
- $6,250,000
- Taxable gain at 2.5%
- $468,750
- Total tax
- $6,418,750
- Effective rate on the gain
- 25.67%
- Net proceeds after tax
- $18,581,250
Illustration, not tax advice. Assumes a resident individual, the whole gain long-term, top marginal rates, no state credits, installment terms, QSBS exclusion or other planning, and no local taxes. Net proceeds are before transaction fees, debt repayment, escrows and earn-outs. Rates are for tax year 2026 where published; see the methodology.
Compare with other states
Neighboring states
- California37.1% combined, $15.72M net
- Colorado28.2% combined, $17.95M net
- Nevada23.8% combined, $19.05M net
- New Mexico29.6% combined, $17.60M net
- Utah28.2% combined, $17.94M net
Common comparisons
- New York34.1% combined, $16.48M net
- Texas23.8% combined, $19.05M net
- Florida23.8% combined, $19.05M net
- Washington33.5% combined, $16.63M net
- Tennessee23.8% combined, $19.05M net
Methodology and sources
Arizona figures are for tax year 2026. The ADOR 2026 Form 140ES booklet uses a 2.5% rate for tax year 2026, flat since 2023. The capital gain subtraction is per ARS 43-1022 and the 2025 Form 140 instructions (line 24). The examples assume a resident individual selling privately held stock for a long-term gain equal to the sale price (zero basis), with every dollar taxed at the top marginal rates, the federal 20% capital gains rate and the 3.8% net investment income tax, and no planning, credits or local taxes. Full assumptions are in the report methodology.
All 50 states and DC with source URLs.
- 1ADOR 2026 Form 140ES booklet (2.5% rate for 2026)
- 2ARS 43-1022 (subtractions; paras. 21 and 22)
- 3ADOR 2025 Form 140 instructions (line 24, 25% LTCG subtraction)
- 4Tax Foundation, State Individual Income Tax Rates and Brackets, 2026. Secondary source
Data last updated October 26, 2026.
Cite this research
You may quote and republish figures from this page with attribution and a link to the source.
Citation
Laurent Capital Research, “The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Arizona,” 2026, https://laurent.capital/research/seller-tax-map/arizonaLink (HTML)
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