Arizona · Investment Advisory Fees Deduction
Investment Advisory Fees Deduction in Arizona (2026)
Investment advisory and management fees are currently suspended for individuals but remain deductible for trusts and estates through 2025. Arizona has a flat 2.5% income tax, so a Arizona filer's combined marginal rate on the next dollar at $72,581 of income is about 24.5% (22% federal + 2.5% AZ).
2026 savings example for Arizona
Planning estimate for a single filer earning $72,581 (Arizona median household income in LevyIO's state dataset) who removes $5,000 from taxable income. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; AZ tax uses the state brackets in LevyIO's dataset and assumes the state follows the federal treatment.
Estimated total savings
$1,225
Federal savings
$1,100
$7,138 → $6,038 · 22% bracket
AZ state savings
$125
$1,450 → $1,325 · 2.5% marginal
Combined marginal rate
24.5%
≈ $245 saved per $1,000 deducted
Federal × Arizona marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The AZ column is the state marginal rate at the midpoint of each range. The last column is the tax saved per $1,000 deducted at that combined rate.
| Federal bracket | Gross income (single) | AZ marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 2.5% | 12.5% | $125 |
| 12% | $28,500 - $66,500 | 2.5% | 14.5% | $145 |
| 22% | $66,500 - $121,800 | 2.5% | 24.5% | $245 |
| 24% | $121,800 - $217,875 | 2.5% | 26.5% | $265 |
| 32% | $217,875 - $272,325 | 2.5% | 34.5% | $345 |
| 35% | $272,325 - $656,700 | 2.5% | 37.5% | $375 |
| 37% | Over $656,700 | 2.5% | 39.5% | $395 |
Eligibility & forms
Investors paying fees for investment management within IRAs or trusts
- Suspended for individuals 2018-2025 under TCJA
- Still deductible for trusts and estates
- Must be paid outside the investment account for IRAs
Federal forms: Schedule A, Form 1041
Arizona filing notes
Arizona's flat 2.5% rate simplifies planning. Use the 25% capital gains subtraction on investment income. Arizona offers generous tax credits for charitable contributions and school tuition organizations.
Common mistakes: Trying to deduct personal investment fees under current law; Not using IRA funds to pay fees directly; Missing trust-level deduction opportunities.
Frequently asked questions
How much can the Investment Advisory Fees Deduction save a Arizona taxpayer in 2026?
In LevyIO's example, a single filer with $72,581 of income (the Arizona median household income in our state dataset) who removes $5,000 from taxable income saves about $1,100 in 2026 federal tax (22% marginal bracket) plus about $125 in Arizona tax (2.5% state marginal rate), roughly $1,225 combined. It is a planning estimate computed from the 2026 IRS brackets and LevyIO's AZ bracket data, not a survey figure.
What is the Arizona income tax rate for 2026?
Arizona has a flat 2.5% income tax. The AZ standard deduction in LevyIO's dataset is $14,600 single / $29,200 married. Flat 2.5% rate since 2023. 25% capital gains subtraction. Generous charitable contribution credits.
Who qualifies for the Investment Advisory Fees Deduction in Arizona?
Investors paying fees for investment management within IRAs or trusts. The federal rules are the same in every state; the requirements are: Suspended for individuals 2018-2025 under TCJA; Still deductible for trusts and estates; Must be paid outside the investment account for IRAs. Arizona filers should confirm on the AZ return whether the state follows the federal treatment.
Which forms do I file to claim the Investment Advisory Fees Deduction?
Federal: Schedule A, Form 1041. Arizona: check the Arizona Department of Revenue instructions for the matching state schedule. Common mistakes: Trying to deduct personal investment fees under current law; Not using IRA funds to pay fees directly; Missing trust-level deduction opportunities.
Investment Advisory Fees Deduction in other states
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.