Some of the most common 501(c) organizations include: Specifically, certified Arizona 501(c) nonprofit corporations are exempt from the Arizona corporate income tax. However, the owners or members of the corporation must report their share of the corporation's income on their personal tax returns and pay Arizona and federal income tax.Īll incorporated Arizona businesses, regardless of whether or not they are required to pay any taxes, should file at least an informational tax return with the Arizona Department of Revenue as well as a federal business tax return (Form 1120) with the IRS.Ĭertain nonprofit entities registered in Arizona may be able to exempt some or all of their qualifying income from Arizona and federal income taxes. S-Corporations and other flow-through entities aren't subject to the double taxation of revenue imposed on a C-Corp, because they aren't required to pay corporate taxes on their revenue. The most commonly used business structure that is subject to corporate taxes is a C-Corporation.īecause C-Corporations pay corporate taxes on their revenue in addition to the personal income taxes shareholders and owners pay on profits withdrawn from the company, profits received from a C-Corporation are subject to a phenomenon known as double taxation. In general, all businesses operating in Arizona which are not registered as a flow-through entity (like a sole proprietorship, a partnership, or an S-Corporation) must report their income and pay both Arizona and Federal corporate income taxes on their earnings. What kind of businesses have to pay the Arizona corporate income tax? ![]() Similar to the personal income tax, businesses must file a yearly tax return and are allowed deductions such as wages paid, cost of goods sold, and other qualifying business expenses. The Arizona corporate income tax is the business equivalent of the Arizona personal income tax, and is based on a bracketed tax system. Arizona's corporate income tax is a business tax levied on the gross taxable income of most businesses and corporations registered or doing business in Arizona.
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