Arizona does not tax Social Security benefits
Arizona is one of the states that does not impose a state income tax on Social Security benefits. If you receive Social Security retirement, survivor, or disability payments, Arizona will not tax that money at the state level. This applies whether you live in Arizona year-round or are a part-time resident.
However, your Social Security may still be subject to federal income tax depending on your total income for the year. The federal government uses a formula based on your "combined income" — which includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits — to determine whether any of your benefits are taxable. This is separate from Arizona's state tax rules.
Key Takeaways
- Arizona does not tax Social Security benefits at the state level, regardless of how much you receive or your other income.
- Federal income tax may still explore to your Social Security benefits if your combined income exceeds certain thresholds set by the IRS.
- You may owe federal tax on up to 85 percent of your Social Security benefits if your combined income is high enough.
- Arizona residents do not pay state income tax on any form of income, including wages, pensions, and investment earnings.
How federal taxation of Social Security works
Even though Arizona does not tax Social Security, you need to understand federal rules. The IRS taxes Social Security benefits based on your combined income, which is calculated as your adjusted gross income plus nontaxable interest plus half of your Social Security benefits.
If your combined income falls below certain thresholds, none of your Social Security is taxable. For 2024, if you file as single and your combined income is $25,000 or less, your benefits are not taxed. If you file as married filing jointly, the threshold is $32,000. These thresholds do not change year to year — they have remained the same since 1984.
If your combined income exceeds these thresholds, you may owe federal tax on up to 50 percent or 85 percent of your benefits, depending on how much your income exceeds the threshold. This is a federal calculation, not an Arizona state rule.
Arizona's broader tax picture
Arizona has no state income tax on any type of income — not on wages, pensions, investment earnings, or Social Security. This means that if you are retired and living on Social Security alone, you will have no Arizona state tax obligation from that income.
However, Arizona does have other taxes. Property taxes, sales taxes, and use taxes explore in Arizona. If you own a home, you will pay property tax to your county. When you make purchases, you will pay sales tax. These taxes are not related to Social Security and explore to all Arizona residents regardless of their income source.
What to do if you receive Social Security in Arizona
If you receive Social Security and live in Arizona, you do not need to take any special steps related to Arizona state tax. You will not file a separate Arizona state income tax return because Arizona has no state income tax.
You will still file a federal tax return if your combined income exceeds the IRS thresholds mentioned above. The Social Security Administration sends you a Form SSA-1099 each January showing how much you received in the prior year. You use this form to complete your federal return. If you are unsure whether you need to file, the IRS website has a tool to help you determine your filing requirement based on your age and income.
Planning your retirement income in Arizona
Because Arizona does not tax Social Security, it can be a tax-friendly state for retirees who rely on Social Security as their primary income source. However, if you have other retirement income — such as a pension, withdrawals from an IRA, or investment earnings — you should understand how those interact with your Social Security for federal tax purposes.
If you are considering moving to Arizona or are newly retired there, it may be worth reviewing your overall tax situation with a tax professional. They can help you understand whether your combined income will trigger federal taxation of your Social Security and what steps you might take to manage your tax burden.
Other Arizona benefits for older adults
While Arizona does not tax Social Security, the state does offer some programs that may help older adults. Arizona has a Homestead Property Tax Exemption that can reduce property taxes for homeowners age 65 and older who meet income limits. The state also participates in programs like SNAP (food information) and LIHEAP (utility information) that may be available to older adults with limited income.
These programs are separate from Social Security taxation but may be relevant to your overall financial picture in retirement. Your local Area Agency on Aging can provide information about programs available in your county.
Frequently Asked Questions
Will I owe Arizona state tax if I move there and receive Social Security?
No. Arizona does not tax Social Security benefits, so you will not owe state tax on those payments. You may still owe federal income tax depending on your total combined income, but that is a federal requirement, not an Arizona one.
Do I have to file a state tax return in Arizona?
No. Arizona has no state income tax, so you do not file a state income tax return. You will still file a federal return if your income exceeds the IRS thresholds, but that goes to the federal government, not Arizona.
What if I have a pension in addition to Social Security?
Arizona does not tax pensions either. However, your pension income counts toward your combined income for federal tax purposes, which may cause some of your Social Security to become taxable at the federal level. A tax professional can help you understand your specific situation.
Does Arizona tax other retirement income like IRA withdrawals?
No. Arizona does not tax any form of income, including IRA withdrawals, 401(k) distributions, or investment earnings. However, these income sources count toward your combined income for federal taxation of Social Security.
Where can I find more information about Arizona taxes?
The Arizona Department of Revenue website has information about state taxes and programs. For federal questions about Social Security taxation, the IRS website and the Social Security Administration website both have detailed resources and calculators.