Arizona does not tax Social Security benefits
Arizona exempts all Social Security income from state income tax. This means if Social Security is your only income source, you owe nothing to Arizona, even if you are required to file a federal return. The exemption applies to retirement benefits, survivor benefits, and disability benefits paid by Social Security Administration.
However, Arizona taxes other retirement income — including pensions, 401(k) withdrawals, and IRA distributions — at the standard state rate. If you receive both Social Security and taxable retirement income, only the non-Social Security portion is subject to Arizona tax.
Key Takeaways
- Arizona does not tax Social Security retirement, survivor, or disability benefits at the state level.
- You must still report Social Security income on your federal return if your combined income exceeds the federal threshold, even though Arizona does not tax it.
- Pensions, 401(k) withdrawals, and IRA distributions are taxed by Arizona at the standard income tax rate.
- If you receive both Social Security and other retirement income, only the non-Social Security portion counts toward your Arizona tax liability.
What counts as Social Security income in Arizona
Social Security benefits include monthly retirement payments to workers age 62 and older, survivor benefits paid to spouses and children of deceased workers, and Supplemental Security Income (SSI) for disabled or blind individuals. Arizona exempts all three categories from state tax.
The exemption also covers any retroactive payments or lump-sum adjustments Social Security sends you to correct past underpayments. If you receive a one-time payment covering multiple months of back benefits, that entire amount is exempt from Arizona tax.
Federal tax rules for Social Security are different
Even though Arizona does not tax Social Security, the federal government may. You must file a federal return if your combined income — including half of your Social Security benefits plus all other income — exceeds a certain threshold. For 2024, that threshold is $25,000 for single filers and $32,000 for married couples filing jointly.
If you cross that threshold, up to 85 percent of your Social Security benefits become taxable at the federal level. This is separate from Arizona's rules. You can owe federal tax on Social Security while owing nothing to Arizona.
How to report Social Security on your Arizona return
You report Social Security income on your federal Form 1040, not on your Arizona return. Social Security Administration sends you a Form SSA-1099 each January showing the total benefits you received in the previous year.
When you file your Arizona return, you do not list Social Security as income. Arizona's tax forms do not have a line for it. If you use tax software, the program will handle this automatically — it calculates your federal taxable Social Security amount and excludes it from your Arizona calculation.
Other retirement income that Arizona does tax
Arizona taxes traditional and Roth IRA withdrawals, 401(k) distributions, 403(b) payouts, and pension income at the standard state rate. Military pensions, federal employee pensions, and private employer pensions all count as taxable income in Arizona.
If you are under age 55 and withdraw from a retirement account before the normal retirement age, Arizona taxes the withdrawal and you may also owe federal early withdrawal penalties. The state does not offer a separate exemption for early retirees or military service members.
Filing requirements when you have only Social Security
If Social Security is your only income source and it falls below the federal filing threshold, you are not required to file a federal return. However, you may want to file anyway if you paid taxes during the year or are may have access to to a refund through the Earned Income Tax Credit or other credits.
Arizona has no separate state filing requirement if you do not owe federal tax. Once you meet the federal threshold and must file federally, you may also need to file an Arizona return depending on your total income and filing status — check the current Arizona Department of Revenue guidelines for your situation.
Planning when you have mixed income sources
If you receive both Social Security and taxable retirement income, calculate your Arizona tax on the non-Social Security portion only. For example, if you receive $20,000 in Social Security and $15,000 from an IRA, Arizona taxes only the $15,000.
Some retirees time IRA withdrawals or pension payments to stay below income thresholds that would trigger Medicare premium increases or reduce other benefits. Since Social Security does not count toward Arizona tax, you have more flexibility in managing your taxable income than residents of states that do tax Social Security.
Frequently Asked Questions
Do I have to file an Arizona return if I only get Social Security?
No, if Social Security is your only income and you do not owe federal tax, you do not need to file an Arizona return. Arizona follows federal filing requirements. If you must file federally, check the Arizona Department of Revenue website to see if your income level requires an Arizona return as well.
Will I owe Arizona tax if my Social Security plus IRA withdrawals exceed $50,000?
Arizona taxes only the IRA withdrawal portion. If you withdraw $20,000 from an IRA and receive $30,000 in Social Security, you owe Arizona tax on $20,000, not $50,000. The Social Security amount is completely excluded from Arizona's calculation.
What if I moved to Arizona after receiving Social Security in another state?
Arizona taxes based on your residency status during the tax year. If you lived in Arizona for part of the year, you file a part-year resident return. Social Security remains exempt regardless of when you moved or what state you lived in previously.
Does Arizona tax my spouse's Social Security if we file jointly?
No. Arizona exempts all Social Security benefits from state tax, whether the benefits belong to you, your spouse, or both. Each person's Social Security is excluded from the household's Arizona taxable income.
Can I deduct medical expenses or property taxes to offset my retirement income in Arizona?
Arizona allows a standard deduction or itemized deductions on your state return, similar to the federal system. These deductions reduce your overall taxable income but do not change the fact that Social Security is already exempt. Consult the Arizona Department of Revenue or a tax professional about deductions that explore to your situation.