Arizona retirement income tax (2026)

By the Deorbit Plan editorial team, a Berrydyne program · Last reviewed November 2026 · Topic: Taxes in retirement

Pending confirmation. The figures below are the ones the simulator uses now, but these are not yet confirmed for 2026 in an official source:

the standard deduction, held at an earlier amount until Arizona publishes its 2026 inflation-adjusted figure.

Income tax: Flat 2.5%
Social Security: Exempt
Retirement exclusion: None modeled
Standard deduction: $30,000 joint · $15,000 single
Personal exemption: None modeled
Capital gains: Taxed as ordinary income

How Arizona taxes retirement income

Arizona taxes income at one flat rate, 2.5%, whatever the amount and filing status^[1].

Before the rate applies, the simulator subtracts a standard deduction of $30,000 on a joint return ($15,000 single). It applies no personal exemption.

Social Security benefits are exempt from Arizona income tax: none of the benefit enters the state base, as in 22 of the 24 states covered here that tax income.

The simulator applies no retirement-income exclusion in Arizona: IRA and 401(k) withdrawals and pensions are taxed like other income. Any narrower break in state law that the simulator does not apply is listed under “What this page leaves out”.

Long-term capital gains and qualified dividends are taxed as ordinary income, at the same rates.

Put together, the example couple below owes $750 in Arizona, the 11th lowest of the 24 states covered here that tax income.

2026 rate

One rate, 2.5%, applies to all taxable income for every filing status; there are no brackets.

Worked example

A retired couple, both 67, filing jointly, with $48,000 of Social Security, $40,000 of IRA withdrawals and a $20,000 pension. The figures are computed when the page is built, by the same state-tax function the simulator runs.

Married couple, both 67, in Arizona
IRA / 401(k) withdrawals + pension	$60,000
Social Security in the state base ($48,000 received, $40,000 federally taxable)	$0
Less retirement exclusion	−$0
Less standard deduction	−$30,000
Less personal exemptions	−$0
Taxable in Arizona	$30,000
Arizona income tax	$750
Share of $108,000 gross income	0.69%

The couple’s next $1,000 of IRA withdrawals would add $25 of Arizona tax.

A single retiree, 67, with half those amounts ($24,000 of Social Security, $20,000 of IRA withdrawals, a $10,000 pension) owes $375, 0.69% of gross income, against the couple’s 0.69%.

Single filer, 67, in Arizona
IRA / 401(k) withdrawals + pension	$30,000
Social Security in the state base ($24,000 received, $11,300 federally taxable)	$0
Less retirement exclusion	−$0
Less standard deduction	−$15,000
Less personal exemptions	−$0
Taxable in Arizona	$15,000
Arizona income tax	$375
Share of $54,000 gross income	0.69%

Arizona state tax calculator

Filing statusAge (both spouses)Social Security benefits for the yearIRA / 401(k) withdrawalsPension or annuity incomeWages

Arizona income tax: $750 (0.69% of $108,000 gross income).
Taxable in Arizona: $30,000 (after $0 of retirement exclusion and $30,000 of deductions and exemptions).
The next $1,000 of IRA withdrawals would add $25.

Runs the same state-tax function as the Deorbit Plan simulator, with withdrawals and pension split evenly between spouses on a joint return. State tax only; federal tax and any local income tax are not included.

As IRA withdrawals rise

The same couple, with Social Security and the pension unchanged, taking more from their IRAs (a larger withdrawal, a required minimum distribution or a Roth conversion all count as distributions here):

Arizona tax for the example couple at higher IRA withdrawals
IRA withdrawals	Arizona tax	Share of gross income	Next $1,000 adds
$0	$0	0.00%	$0
$20,000	$250	0.28%	$25
$40,000	$750	0.69%	$25
$80,000	$1,750	1.18%	$25
$120,000	$2,750	1.46%	$25
$200,000	$4,750	1.77%	$25

Neighbouring states

The example couple’s state tax in Arizona and in the neighbouring states covered here, same income and ages:

Example couple’s state income tax, 2026
State	Income tax	Social Security	Couple’s tax	Difference
Arizona	Flat 2.5%	Exempt	$750	n/a
California	1%–12.3%	Exempt	$735	−$15
Nevada	None	Not taxed	$0	−$750
Utah	Flat 4.45%	Taxed	$4,450	+$3,700
Colorado	Flat 4.4%	Exempt	$0	−$750

Against Arizona, the couple would pay more in Utah (+$3,700); less in California (−$15), Nevada (−$750), Colorado (−$750). With $200,000 of IRA withdrawals instead of $40,000, they would owe $4,750 in Arizona, against California ($11,998), Nevada ($0), Utah ($11,606), Colorado ($6,151).

What this page leaves out

What the simulator does and does not handle for Arizona, item by item^[1]:

Flat 2.5%.
Standard deduction HELD at $30,000 married filing jointly: Arizona’s own indexed statutory amount was $31,500 married filing jointly for 2025 (A.R.S. §43-1041; ADOR Feb 2026 update) and the 2026 amount is not yet published, so tax is slightly overstated.
Social Security exempt.
No retirement-distribution exclusion.
The 25% net long-term capital gains subtraction (ARS 43-1022) is ignored, so gains are modeled as ordinary.

In every state the simulator also leaves out credits, itemized deductions, deductions that phase out with income, local income taxes, surtaxes and any deduction for federal tax paid. It holds state amounts fixed and does not index them for inflation.

See it over a full plan

Load the demo plan with Arizona as the state of residence and see the state tax line year by year, alongside federal tax, RMDs and Roth conversions. Open it in the simulator →

If you already have a saved plan, the link only takes you to the Household panel, where the state is set; your plan is not changed.

This page shows how the rules work. It is not financial, tax or investment advice. State law has details these pages leave out, so check the state’s own instructions or ask a tax professional before you act. See the disclaimer.

Sources

Verified November 11, 2026. The full verification record for this entry is in the sources ledger, with every other figure the simulator uses on the sources page.