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Retirement planning for Arizona.
Flat 2.5%. Run your projection. free
Run your projection — freeArizona 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%).
What this means for your retirement
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 — modest but meaningful for public-sector retirees
The flat tax simplifies Roth conversion planning — every dollar converted costs the same 2.5% state rate regardless of amount, making large conversions relatively painless
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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