State retirement taxes · 2026
Does Arizona tax retirement income?
Short answer: Yes — everything except Social Security. Arizona does not tax Social Security benefits. Only Arizona and federal government pensions get a break — up to $2,500 per person.
What’s taxed in Arizona
2026 rules.
- Social SecurityNot taxed
- Arizona does not tax Social Security benefits.
- PensionsTaxed
- Pensions are taxed, except up to $2,500 per person of Arizona or federal government pension.
- IRA & 401(k) withdrawalsTaxed
- IRA and 401(k) withdrawals are fully taxable at 2.5%.
- Military retirement payNot taxed
- Military retirement pay is fully exempt (a 100% subtraction), and surviving spouses can subtract survivor benefits too.
- Income tax rate2.5% flat
- A flat 2.5% on all income for every filing status.
Does Arizona tax Social Security?
Arizona does not tax Social Security benefits.
Social Security benefits are fully exempt, with no age or income test. Tier 1 and Tier 2 Railroad Retirement benefits are exempt too.
Your federal return is a separate question — see how much of your benefit the IRS taxes with the taxable Social Security calculator.
Are pensions taxed in Arizona?
Pensions are taxed, except up to $2,500 per person of Arizona or federal government pension.
Pensions from the U.S. Civil Service Retirement and Disability Fund and from Arizona state or local retirement systems get a subtraction of the amount received or $2,500, whichever is less, per taxpayer, at any age. Public pensions from other states do not qualify, and private pensions get no subtraction.
Public vs. private pensions: Arizona and federal civil service pensions: up to $2,500 per person exempt. Other states’ public pensions and all private pensions: fully taxable.
Are IRA and 401(k) withdrawals taxed in Arizona?
IRA and 401(k) withdrawals are fully taxable at 2.5%.
They are taxed as they appear in your federal adjusted gross income (AGI). Arizona has no general retirement-income exclusion, and the 2026 tax law (Ch. 140) did not add one.
Required minimum distributions (RMDs) are IRA and 401(k) withdrawals, so the same rules apply. Estimate your RMD.
Is military retirement pay taxed in Arizona?
Military retirement pay is fully exempt (a 100% subtraction), and surviving spouses can subtract survivor benefits too.
What is Arizona’s income tax rate?
A flat 2.5%.
A flat 2.5% on all income for every filing status. We found no enacted change for 2026.
Standard deduction and exemptions
For 2025 the standard deduction is $15,750 single, $31,500 married filing jointly and $23,625 head of household. The 2026 amount is indexed and has not been published yet by the Arizona Department of Revenue. Each person 65 or older gets an extra $2,100 exemption ($1,500 if blind). Starting in 2026 you can add charitable gifts to the standard deduction, up to $1,000 single or $2,000 joint.
What tax breaks do seniors get in Arizona?
Arizona copies the federal senior deduction as a state subtraction: up to $6,000 per person 65 or older, phased out above $75,000 of modified AGI ($150,000 joint), for 2025–2028. Each person 65+ also gets a $2,100 exemption. A property tax credit (Form 140PTC) is available at 65+ (or on SSI) if household income is under $3,751 living alone or under $5,501 living with others.
What changed for 2026?
HB 4168 (Laws 2026, Ch. 140), signed June 13, 2026, conforms Arizona to the federal tax code as of January 1, 2026, back to 2025. It adds subtractions mirroring the federal senior deduction, tips and overtime (from 2025, to the extent deducted federally) and car-loan interest (2025 only). From 2026 it raises the dependent credit from $100 to $125 and lets charitable gifts raise the standard deduction.
The 2.5% rate is set in law; details come from the 2025 Form 140 booklet and HB 4168 (Laws 2026, Ch. 140, signed June 13, 2026).
What we couldn’t confirm
- Arizona’s 2026 standard deduction has not been published, so we show the 2025 amounts.
- We could not confirm what happened to SB 1106, a 2026 bill for a $6,000 retirement-income subtraction at 60+; it is not part of the enacted 2026 tax law, so we don’t count it.
How Arizona compares with its neighbors
Thinking of moving across the line? Here’s how each bordering state treats retirement income in 2026.
- ArizonaThis pageFriendlySocial Security Not taxedTop rate: 2.5% flat
- CaliforniaLess friendlySocial Security Not taxedTop rate: 12.3% top
- NevadaTax-free retirement incomeSocial Security Not taxedTop rate: None
- New MexicoLess friendlySocial Security Partly taxedTop rate: 5.9% top
- UtahMixedSocial Security Partly taxedTop rate: 4.45% flat
State tax is half the picture — check the federal side
Arizona retirement tax questions
Is Arizona tax-friendly for retirees?
We rate Arizona “Friendly” for 2026. Arizona does not tax Social Security benefits. Only Arizona and federal government pensions get a break — up to $2,500 per person. The top income tax rate is 2.5%.
Are required minimum distributions (RMDs) taxed in Arizona?
RMDs are withdrawals from IRAs and 401(k)-type plans, so they follow Arizona’s rules for those accounts. IRA and 401(k) withdrawals are fully taxable at 2.5%.
Is military retirement pay taxed in Arizona?
No. Military retirement pay is fully exempt (a 100% subtraction), and surviving spouses can subtract survivor benefits too.
What is Arizona’s income tax rate for 2026?
A flat 2.5% on all income for every filing status. We found no enacted change for 2026.
Sources for Arizona
Primary sources only. We re-check them whenever an agency publishes new figures.
- State
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