Military Retirement Pay State Income Tax Exemption
100% of military retirement pay is exempt from Arizona state income tax.
Who qualifies
- Available to any veteran
- Arizona residency
Details
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).
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 any service-connected disability under 100% (ARS 42-11111).
$4,873 (2026) × VA disability %
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
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