Arizona retirement taxes in 2026: military retired pay, Social Security and pensions
Short answer
Arizona does not tax Social Security or military retired pay; the military subtraction has covered the full amount since 2021, Survivor Benefit Plan payments included. Other retirement income (private pensions, IRAs, 401(k)s) is taxed at Arizona's flat 2.5%, except up to $2,500 a year of a U.S. government or Arizona public pension. Starting in 2026, veterans rated 100% service-connected pay no property tax on their home.
Not tax advice. Rules change; confirm with the Arizona Department of Revenue, your county assessor or a tax professional.
Arizona at a glance (2026)
| Arizona | |
|---|---|
| State income tax | Flat 2.5% |
| Social Security | Not taxed |
| Military retired pay and SBP | Not taxed (full subtraction since 2021) |
| Private pensions, IRA, 401(k) | Taxed at 2.5% |
| U.S. government or Arizona public pension | Up to $2,500 per person subtracted |
| 65+ property tax | Senior Valuation Protection: income up to $47,712 (one owner) or $59,640 (two or more), 2026 |
| 100% disabled veteran | Full exemption on the primary residence, from tax year 2026 |
| Average property tax | About 0.48% of home value a year |
Income tax rate
A flat 2.5% for tax year 2023 and later. Source: Arizona Department of Revenue, news release (Jan 29, 2024); 2025 Form 140.
Military retired pay
Fully exempt for tax years starting in 2021. There's no age or service-length condition. Survivor Benefit Plan annuities qualify for the same subtraction. Active-duty pay has been exempt since 2006. Sources: A.R.S. 43-1022; Arizona Department of Revenue, Military Tax Filing; ITR 11-3 (SBP).
Pensions, IRA and 401(k)
Taxed at 2.5%. The one break: up to $2,500 per person of a U.S. government pension (civil service, foreign service and other federal plans) or an Arizona public pension (ASRS, PSPRS and others). Other states' government pensions don't qualify. Source: A.R.S. 43-1022; 2025 Arizona Form 140, line 29a.
Property tax for homeowners 65+
Senior Property Valuation Protection freezes your home's valuation (not the tax rate) if:
- at least one owner is 65 or older,
- it's been your primary residence for 2 years, and
- household income from all sources is no more than $47,712 (one owner) or $59,640 (two or more owners) for 2026, averaged over 3 years.
Apply with your county assessor by September 1, and renew every 3 years. Sources: Maricopa County Assessor, Senior Valuation Protection (2026 application); Pinal County Assessor.
Disabled veterans
- 100% service-connected: starting with tax year 2026, the primary residence is fully exempt from property tax (HB 2792, signed Feb 12, 2026). An unremarried surviving spouse keeps it.
- Under 100%: a partial exemption prorated by your disability rating. The amount and any income or value limits are set each year; confirm them with your county assessor, since counties currently publish different figures.
Sources: Arizona Legislature, HB 2792 (Laws 2026, Ch. 2) fact sheet and law text; A.R.S. 42-11111.
Common mistakes
- Assuming all retirement income is tax-free. Only Social Security, military retired pay and up to $2,500 of a U.S. or Arizona government pension are. Private pensions, IRAs and 401(k)s are taxed at 2.5%.
- Thinking the senior program freezes the tax bill. It freezes the valuation; tax rates can still change. It isn't automatic: apply by September 1 and renew every 3 years.
- Assuming the full veteran exemption covers any rating. It's for 100% service-connected veterans, on the primary residence, from 2026.
Moving here?
- Retiring to Phoenix or Mesa: what your home sale leaves you, and the drive to the hospital and VA
- Federal rules: Is military retirement taxable?
Chris Harris isn't licensed in Arizona. He'll introduce you to a vetted licensed agent there. Ask Chris →
FAQ
- Does Arizona tax military retirement?
- No. Military retired pay has been fully exempt since 2021, including Survivor Benefit Plan payments.
- Does Arizona tax Social Security?
- No.
- Does Arizona tax pensions and IRAs?
- Yes, at a flat 2.5%, except up to $2,500 a year of a U.S. government or Arizona public pension.
- Do 100% disabled veterans pay property tax in Arizona?
- Not on their primary residence, starting with tax year 2026.
Sources
- Arizona Department of Revenue, news release (Jan 29, 2024)
- Arizona Revised Statutes 43-1022
- Arizona Department of Revenue, Military Tax Filing
- Arizona Department of Revenue, ITR 11-3 (June 22, 2011)
- Maricopa County Assessor, Senior Valuation Protection
- Pinal County Assessor, Senior Freeze
- Arizona Legislature, HB 2792 fact sheet (2026)
- Arizona Legislature, Laws 2026, Ch. 2
- Arizona Revised Statutes 42-11111
- Tax Foundation, Arizona 2026
Last reviewed October 21, 2026. Not tax advice.
Social Security
Not taxed. Arizona subtracts any Social Security or Railroad Retirement benefits included in federal income. Source: A.R.S. 43-1022; 2025 Arizona Form 140, line 30.