Retiring in Arizona: how your income is taxed
Arizona is fairly tax-friendly for retirees. On a typical retirement income it ranks #27 of 51 for the lowest state income tax.
The rules in Arizona
- Social Security: Social Security benefits are fully exempt from Arizona income tax.
- Pensions: Private pensions are taxed at Arizona's 2.5% flat rate. Federal civil service and Arizona state and local government pensions get a subtraction of up to $2,500 per person. Military retirement pay is fully exempt.
- 401(k), 403(b) and IRA withdrawals: 401(k) and IRA withdrawals are taxed at Arizona's 2.5% flat rate. Unlike government pensions, they get no subtraction.
- At 65 and older: Each filer 65 or older gets a $2,100 exemption, and Arizona subtracts the federal senior deduction (up to $6,000 per person, 2025–2028).
Calculate your Arizona retirement taxes
State income tax in Arizona: $395 a year
In Arizona, the 401(k)/IRA amount counts as IRA withdrawals, which don't qualify for the pension exclusion. Enter withdrawals from employer plans such as a 401(k) or 403(b) as pension.
In Arizona you'd pay about $395 in state income tax and $4,336 in federal income tax on $70,000 of retirement income, keeping $65,269 (6.8% total).
Arizona ranks #27 of 51 for the lowest state tax on this income. 19 states charge no state income tax on this income.
What retirees pay in Arizona
| Retirement income | State tax (single) | State tax (married) | Federal tax (single) |
|---|---|---|---|
| $24,000 Social Security, $12,000 401(k)/IRA | $0 | $0 | $0 |
| $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA | $395 | $0 | $4,336 |
| $40,000 Social Security, $40,000 pension, $50,000 401(k)/IRA, $10,000 other income | $1,984 | $1,290 | $19,812 |
Age 67 or older, 2026 rules including the federal senior deduction. For married couples, income is the household total and both spouses are 67 or older. State estimates apply Arizona's main exclusions and may differ for income-tested credits.
States with lower retirement taxes
Moving to Arizona in retirement?
Compare the tax on your Social Security, pension and 401(k)/IRA income, and typical living costs, with the state you'd leave. These are the states most households moving to Arizona come from (IRS migration data, 2022–2023).
- California to Arizona
- Texas to Arizona
- Washington to Arizona
- Colorado to Arizona
- Illinois to Arizona
- Florida to Arizona
Frequently asked questions
Does Arizona tax Social Security?
Not taxed. Social Security benefits are fully exempt from Arizona income tax.
Does Arizona tax pensions?
Taxed. Private pensions are taxed at Arizona's 2.5% flat rate. Federal civil service and Arizona state and local government pensions get a subtraction of up to $2,500 per person. Military retirement pay is fully exempt.
Does Arizona tax 401(k) and IRA withdrawals?
Taxed. 401(k) and IRA withdrawals are taxed at Arizona's 2.5% flat rate. Unlike government pensions, they get no subtraction.
Is Arizona a good state to retire for taxes?
For a single retiree with $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA, Arizona charges about $395 in state income tax, ranking #27 of 51 (lowest tax first).
Related
Sources: azleg.gov, aarp.org. Rules reviewed . Some 2026 amounts were not yet published or sources differed; confirm with the state revenue department.