Is Arizona right for you?
Arizona combines things that usually come separately: no annual report for LLCs, a low formation cost, and a flat 2.5% income tax that is the lowest flat rate in the country among states that levy one at all.
The state has grown quickly as businesses have moved out of California, so the commercial infrastructure and banking familiarity are better than the fee schedule suggests.
One procedural quirk to plan for. Arizona requires newly formed LLCs to publish a notice of formation in an approved newspaper in most counties — an extra step, a small extra cost, and a real deadline. Maricopa and Pima counties are exempt, which is why most filings are directed there.
- Cost-sensitive founders who still want a mainstream state
- Businesses serving the U.S. southwest
- Anyone who wants no annual report but finds New Mexico too obscure
- A newspaper publication requirement applies outside Maricopa and Pima counties
- Flat 2.5% income tax on Arizona-sourced income
- Transaction privilege tax works differently from a standard sales tax
What Arizona taxes
A summary, not advice — your actual position depends on where you live, where your customers are, and how the company is treated federally.
Income tax
Flat 2.5% on Arizona-sourced income — the lowest flat rate in the country
Sales tax
5.6% transaction privilege tax at state level, plus local rates
Franchise tax
None
Arizona for a non-resident founder
Open to non-residents with no annual report to remember. We file in an exempt county where possible so the publication requirement does not apply to you.
What Arizona asks for every year
Formation is the easy part. These are the obligations that keep the company alive — and the ones people forget.
- 01
No annual report
Arizona does not require LLCs to file an annual report, and charges no annual fee. Corporations do file one.
- 02
Statutory Agent
Arizona requires a statutory agent with a physical in-state address, maintained continuously.
- 03
Publication
A one-time notice of formation must be published in most counties within 60 days. Maricopa and Pima are exempt.