Military Retirement Pay State Income Tax Exemption
100% of military retirement pay is exempt from Arizona state income tax.
Apply now
Apply directly through the official Arizona agency.
About this benefit
Eligibility
Must be receiving retired or retainer pay from U.S. uniformed services. No disability rating required. No income cap.
Covers
100% of military retirement pay, SBP, RCSBP, and RSFPP annuities are exempt. Active-duty and reserve pay is also exempt. Effective since tax year 2021.
How to apply
Claim on Arizona state income tax return (subtract from taxable income).
Verified against official source
Last checked 2026-05-04 against azdor.gov. Always confirm current rates and rules with the Arizona state agency before applying.
Other Arizona Tax Benefits
Disabled Veteran Property Tax Exemption (Partial Disability)
Property tax exemption proportional to disability percentage for veterans with 10% or higher service-connected disability.
$4,873 × VA% partial exemption (assessed value cap $36,865)
Full Property Tax Exemption (100% Disabled)
Full property tax exemption with no assessed value cap for 100% total and permanently disabled veterans.
Full property tax exemption
See every benefit you qualify for in Arizona
Get a personalized list of federal, state, and local veteran benefits based on your service history, disability rating, and Arizona residency — in under 2 minutes.
Find My Arizona Benefits