Social Security Benefits Are Not Taxed in Arizona

an older couple in front of an image of a social security card
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If you have Arizona on your short list for retirement options, your tax situation will be especially important in making your final decision. Arizona does not tax the following items, and they are not included in your computation of gross income or adjusted gross income for the purpose of determining if you need to file an income tax return in Arizona:

  • Interest from U.S. Government obligations
  • Social security retirement benefits received under Title II of the Social Security Act
  • Benefits received under the Railroad Retirement Act
  • Active duty military pay (check on residency and other prerequisites)
  • Pay received for active service as a reservist or a National Guard member

Arizona does tax income from pensions and other sources earned outside the state. If you are taxed on income earned in another state by both Arizona and the other state, you may be able to claim a credit for taxes paid to that other state. Seniors may also be able to avail themselves of these income tax benefits:

  1. You may receive a subtraction, of up to $2,500, for pension income received from the State of Arizona or from U.S. government service.
  2. You may be eligible for an additional exemption for being blind or over age 65.
  3. If you are caring for your elderly parent, you may be eligible for an additional exemption on your Arizona tax return.

People who are thinking of moving to Arizona have many items to consider. Jobs, home prices, schools, taxes — these are all factors that will determine whether a move to Arizona will be a positive one for you and your family. Here are some other Arizona tax details to examine before you come to the Valley of the Sun. For specific questions about your income taxes in Arizona, visit the Arizona Department of Revenue online or call them.

Tax information provided here is subject to change without notice. I am not a tax specialist. Please contact a tax professional with your Arizona-specific tax questions.