Retirement planning for Arizona.

Flat 2.5%. Start with your situation

Arizona at a glance (2026)

Top combined rate: 39.5%
State tax model: Flat 2.5%
Standard deduction: $16,100
RMD start age: 73

No state income tax

Arizona does not levy a state income tax. Your 401(k)/IRA withdrawals, Roth conversions, Social Security, and investment gains are taxed only at federal rates (10-37%).

Arizona retirement planning insights

Arizona's flat 2.5% rate is one of the lowest in the country. Combined with federal, the top rate is only 39.5%, making it one of the most tax-efficient states for large IRA/401(k) withdrawals
Arizona does not tax Social Security benefits at the state level. Combined with the low flat rate on other income, it's one of the top retirement destinations for total tax burden
Arizona allows a $2,500 deduction on retirement income from Arizona public pensions and a separate $2,500 for federal/military pensions. That is modest but useful for public-sector retirees
The flat tax simplifies Roth conversion planning. Every dollar converted costs the same 2.5% state rate regardless of amount, so large conversions cost relatively little in state tax

Frequently asked questions

Is Arizona a good state for retirement taxes?

Yes. Arizona's flat 2.5% state income tax is among the lowest graduated/flat rates in the US. Social Security is exempt from state tax. The combination of low taxes, warm weather, and lower cost of living (vs California) makes Arizona one of the top 5 retirement destinations.

Does Arizona tax 401(k) withdrawals?

Yes, at the flat 2.5% rate. Unlike some states that exempt retirement income, Arizona taxes all income at the same rate. However, 2.5% is low enough that the simplicity and predictability outweigh the lack of an exemption for most retirees.

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