Does Arizona tax pensions and retirement income?
Taxed, with narrow exceptions
Yes. Arizona generally taxes the same part of a pension that is taxable on your federal return. Pensions from Arizona state and local governments and the federal government get a subtraction of up to $2,500, and military retired pay is excluded.
In the state's own words
Copied word for word from the official document linked below each quote:
“Pensions (Full-Year and Part-Year Residents) Full-year and part-year residents only: Additionally, as a general rule, the same taxable portion of an individual’s pension for federal purposes will be taxable for Arizona purposes.”
“However, there is a subtraction of up to $2,500 for pension income received from the state of Arizona and its political subdivisions, or from U.S.”
And Social Security?
No. Arizona tells residents to exclude Social Security retirement benefits from the income they report to the state. The Arizona Social Security page quotes the rule.
Federal tax still applies
Whatever Arizona does, pensions, annuities and traditional IRA or 401(k) withdrawals are generally taxable on your federal return. See the federal tax brackets and, if you are 73 or older, the required minimum distribution calculator.
State rules change, and the details (age limits, income limits, which plans qualify) matter. Check with the Arizona Department of Revenue before you file or move.
Other states in the same group
Check our work
The answer above comes from this document. Follow the link and compare.
- Individual Income Tax InformationArizona Department of Revenue. Read on November 12, 2026.