The reciprocity between Arizona and California covers all forms of income. It's actually a hybrid reciprocal arrangement known as reverse-credit states. When two states can both tax the same sources of income (for example, the income earned in a non-resident state), usually the resident state provides a credit for the income that is earned and taxed in the nonresident state. With a reverse-credit arrangement, it is the opposite. You will be taxed on all of your income in the resident state first, and then the nonresident state will allow you to claim a credit for the income on the nonresident state's tax return.
From your post you and your wife seem to be residents of Arizona (but if not, then just substitute California for Arizona and Arizona for California). If so, you first prepare the Arizona return to determine Arizona tax on all of your income. Your Arizona tax will be any AZ tax withheld minus any refunds or in addition to any additional tax you must pay. You will have to prorate the tax to the amount of income taxed by California (divide California income by total Arizona gross income, and multiply by the Arizona tax figure above). After finishing the Arizona return and navigating into the California nonresident return, you will eventually come to a screen that discusses tax credit for taxes paid to another state. You will fill this screen by mentioning how much income the other state taxed (the California income you calculate), the state taxing the income (AZ) and the amount of tax (the prorated amount you calculated above). California's credit will be the lower of how much California taxes the income or how much Arizona taxes the income. For this reverse-credit arrangement, the source of the income does not matter.
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