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2026 rules · verified against Arizona's primary source
Arizona fully exempts military retirement pay from state income tax.
Military retired/retainer pay is fully exempt from Arizona income tax (no cap) for tax year 2021 and later.
Treatment
fully exempt
Top marginal rate
2.50%
Source: https://www.azleg.gov/ars/43/01022.htm · verified July 2026
Estimated Arizona state income tax on your military retirement, using the top marginal rate on the taxable portion (an upper bound; your effective rate is usually lower).
More Arizona: all Arizona veteran benefits · military retirement tax in every state · what your pension is worth