221-SBI: Underpayment of Estimated Tax for Small Business Income (2025)

Who files this form

Form 221-SBI calculates underpayment of estimated tax and the related penalty for Arizona small business income. It is for use with Forms 140-SBI, 140NR-SBI, and 140PY-SBI.

If your 2025 tax minus the tax credits on your Arizona Small Business Income tax return is less than $1,000, stop at line 4. You do not owe the penalty and should not file Form 221-SBI.

The supplied form does not give complete filing criteria.

When it's due

For tax year 2025, the form lists these estimated payment due dates:

• April 15, 2025
• June 16, 2025
• September 15, 2025
• January 15, 2026

The penalty calculation for tax year 2025 runs through April 15, 2026, or the payment date if earlier. The form does not state a separate filing deadline for Form 221-SBI.

What you'll need

Have the following information available to complete the form:

• Your name and Social Security number, plus your spouse’s name and middle initial if filing jointly.
• Your 2025 Form 140-SBI, 140NR-SBI, or 140PY-SBI, including tax and tax credit amounts.
• Your immediately preceding year’s tax liability after tax credits.
• Your small business income estimated tax payment amounts and payment dates.

If you annualize your income, you also need Arizona small business taxable income and allowed tax credits for each period shown on the worksheet: January 1 through March 31, May 31, August 31, and December 31, 2025.

How to file

Include Form 221-SBI with your Arizona Form 140-SBI, 140NR-SBI, or 140PY-SBI return, unless line 4 tells you not to file it.

The supplied form does not provide a mailing address or e-file instructions.

Common mistakes

• Do not file Form 221-SBI if line 4 is less than $1,000. The form says you do not owe the penalty.
• Complete lines 11 through 13 of one column before moving to line 11 of the next column.
• Check the box on line 9 if you use another installment method. If you annualize, complete the page 2 worksheet and transfer its line 15 amounts to line 9 on page 1.
• On the annualized income worksheet, complete lines 1 through 15 of one column before starting the next column.
• Do not assume all penalty rates are printed. The form marks the rates for October through December 2025 and January through April 15, 2026 as to be determined.

Questions people ask

How is the required annual payment calculated?

Line 7 uses the smaller of 90% of your 2025 tax after tax credits or your immediately preceding year’s tax liability after tax credits. Line 6 refers you to instructions, which were not supplied.

Can I use an annualized income installment method?

Yes. The form provides an Annualized Income Installment Worksheet on page 2. If you annualize, enter the worksheet’s line 15 amounts in the corresponding columns of line 9 on page 1.

Does the form provide an exception for federal relief?

Line 1 has a box for claiming an exception from the estimated payment penalty because you qualified for federal relief under IRC § 6654. It directs you to instructions, which were not supplied.

Is there a limit on the penalty?

For each column, line 27 tells you to use the smaller of line 13 multiplied by 10% or the penalty amount from line 26. Line 28a adds the line 27 amounts.

Does the form have a place to request a waiver?

Yes. Line 28 includes a waiver request checkbox and an amount field at line 28b. It tells you to subtract line 28b from line 28a and enter the result on line 28c. The supplied form does not explain waiver eligibility.

Official sources

• https://azdor.gov/forms