Does Arizona have state income tax? Yes. Arizona levies an individual income tax. It is not a no-income-tax state like Texas, Florida, Nevada, Washington, or Wyoming—though online searches often lump Arizona into that group by mistake.
What rate applies, and how are Social Security benefits treated? Per the Arizona Department of Revenue (DOR), tax year 2025 uses a flat 2.5% rate for all income levels and filing statuses. Arizona legislative fact-sheet language for H.B. 2918 states the individual rate decreases to 2.47% for taxable years beginning January 1, 2026. Social Security retirement benefits under Title II of the Social Security Act are not taxed by Arizona.
Data note: Rate and Social Security treatment come from azdor.gov Individual Income Tax Highlights (2025), azdor.gov Individuals filing pages, A.R.S. § 43-1022(10), and the Arizona Senate Research fact sheet for H.B. 2918 (March 19, 2025). This is general information, not tax or legal advice. Confirm current forms and instructions with DOR or a licensed tax professional before filing.
Arizona Income Tax at a Glance
- State income tax: Yes—Arizona has one
- Tax year 2025 rate: flat 2.5% (DOR: all income levels and filing statuses; optional tax tables obsolete)
- Taxable years beginning Jan. 1, 2026: 2.47% individual rate per H.B. 2918 Senate fact sheet
- Social Security (Title II): not taxed by Arizona (DOR + A.R.S. § 43-1022(10))
- Railroad Retirement benefits: also listed among income Arizona does not tax (DOR Individuals page)
- 2025 standard deductions (DOR Highlights): $15,750 single / MFS; $31,500 MFJ; $23,625 head of household
- 2025 filing thresholds (gross income): same dollar amounts as those standard deductions by status (DOR Individuals page)
- Residents: generally taxed on all income, including earnings from other states, subject to Arizona modifications
Why People Confuse Arizona With No-Tax States
Arizona’s rate is relatively low and flat compared with multi-bracket states, and lifestyle headlines often group Sun Belt destinations together. That marketing shorthand creates a false impression.
Arizona still expects most residents who meet gross-income thresholds to file. Full-year residents start from federal adjusted gross income, then apply Arizona additions and subtractions. Part-year residents and nonresidents have different sourcing rules on Forms 140PY and 140NR—always follow the current booklet for your status.
Related reading if you’re weighing total cost of ownership: closing costs for buyers in Arizona · moving to Arizona from California · is Arizona a community property state?
Official 2025 and 2026 Rate Snapshot
Tax year 2025: 2.5% flat
DOR’s Individual Income Tax Highlights page states plainly: “2025 New Tax Rate of 2.5% for All Income Levels and Filing Status.” The optional tax tables are obsolete. Calendar-year 2025 returns are due April 15, 2026 (extended filing through October 15, 2026 if you have a valid extension).
Taxable years beginning 2026: 2.47%
The Arizona Senate Research fact sheet for H.B. 2918 (tax rates; reductions) provides that, for taxable years beginning January 1, 2026, the individual income tax rate (and related estates/trusts and Arizona small-business rates described in that sheet) decreases from 2.5% to 2.47%. Use DOR’s published 2026 forms when they are released to confirm how the rate appears on your return.
Arizona’s current published structure for these years is the flat rate DOR and the Legislature describe—not older multi-bracket tables.
Social Security, Retirees and Other Subtractions
Social Security
On the DOR Individuals page, full-year residents are told to exclude income Arizona law does not tax, including Social Security retirement benefits received under Title II of the Social Security Act.
A.R.S. § 43-1022(10) matches that policy: subtract from Arizona gross income the amount included in federal AGI under IRC § 86 relating to taxation of Social Security and railroad retirement benefits. Practically: if a portion of Social Security was taxable federally, Arizona lets you subtract that amount so it is not taxed again at the state level—and DOR’s residency guidance frames Title II Social Security as income Arizona does not tax.
Retirees more broadly
“No state income tax for retirees” is still incorrect. Wages, many pensions, investment income, and other taxable items can remain on an Arizona return. DOR notes that, as a general rule, the federally taxable portion of a pension is taxable for Arizona, with limited subtractions (for example, certain Arizona/political-subdivision or U.S. government-service pension amounts described in form instructions, and 100% of uniformed-services retired or retainer pay for tax years 2021 forward).
Confirm every subtraction on the current Form 140 instructions—do not rely on a blog post for your filing position.
What This Means If You’re Buying in Scottsdale or Phoenix
State income tax is one line in a relocation budget next to property taxes, insurance, HOA dues, and closing costs. A lower flat rate can still be a meaningful difference versus high-tax states—but it is not zero.
If you are shopping with retirement income, ask your CPA how Arizona will treat each income stream before you waive contingencies on a purchase. Title, vesting, and community-property questions for married buyers are separate from the income-tax return—see is Arizona a community property state? and Arizona homestead exemption 2026.
“When buyers tell me they picked Arizona because there is 'no state income tax,' I pause the tour and pull up the Department of Revenue page. Arizona does tax income—just at a low flat rate—and Social Security is treated differently than wages. Getting that straight early keeps the home search and the tax plan aligned.”
— Elizabeth Vijan, Tackett Team, eXp Realty
Frequently Asked Questions
Does Arizona have state income tax?
Yes. Arizona has an individual income tax. DOR publishes a 2.5% flat rate for 2025; H.B. 2918 fact-sheet language sets 2.47% for taxable years beginning January 1, 2026.
Does Arizona have no state income tax?
No. Arizona is not a no-income-tax state. File when you meet DOR thresholds for your residency status.
Does Arizona tax Social Security benefits?
No for Title II Social Security retirement benefits, per DOR guidance and the A.R.S. § 43-1022(10) subtraction for amounts included under IRC § 86.
Does Arizona have state income tax for retirees?
Yes on taxable non-excluded income. Social Security (Title II) is excluded; other retirement income follows DOR rules and form instructions.
Relocating or Buying? Let’s Map Cost of Living With the Home Search
If Arizona’s tax picture is part of your move-or-stay decision, I can help you weigh neighborhoods, budgets, and timing while you work with your tax advisor on the return itself.
Elizabeth Vijan | Tackett Team, eXp Realty
Scottsdale & Phoenix Real Estate Specialist
Talk With Elizabeth · Call or text 602-885-7752
Sources: Arizona DOR: Individual Income Tax Highlights (2025) · Arizona DOR: Individual Income Tax Information · A.R.S. § 43-1022 (subtractions, including Social Security) · Arizona Senate Fact Sheet, H.B. 2918 (2.47% rate for TY beginning 2026)
Disclaimer: General information only—not tax, legal, or financial advice. Tax law and forms change; verify rates, subtractions, and filing requirements with the Arizona Department of Revenue or a qualified tax professional. Information deemed reliable but not guaranteed. Equal Housing Opportunity.
Tackett Team, eXp Realty · Get in touch