You've heard the rumors. Maybe a neighbor at the golf course mentioned it, or you saw a frantic post on Facebook about the government finally coming for your retirement check. It’s the kind of thing that keeps you up at night when you’re living on a fixed income. You want to know, point-blank: Does Arizona tax Social Security?
The short answer is no.
Arizona does not tax Social Security benefits. Period. It doesn't matter if you're pulling in the bare minimum or the maximum possible benefit; the state of Arizona treats that money as untouchable. This is one of those rare moments where the news is actually good. While the federal government might take a bite out of your check, the Grand Canyon State lets you keep every cent of it.
The Reality of Arizona Social Security Tax
Honestly, it’s a bit of a relief. When you look at the tax landscape in 2026, things are getting complicated. We’ve got new federal laws like the One Big Beautiful Bill Act (OBBB) shaking things up, but Arizona has remained a steady harbor for retirees. The state's tax code specifically excludes Social Security income from your Arizona Adjusted Gross Income (AGI).
You don't have to do any complex math to figure out a "state portion." There isn't one.
However, don't confuse this with federal taxes. That's where people usually trip up. The IRS still uses a formula to see if they can tax up to 85% of your benefits. They look at your "combined income"—which is basically your AGI plus non-taxable interest plus half of your Social Security. If that number crosses $25,000 for a single person or $32,000 for a married couple, the feds want their cut.
But once you’ve paid Uncle Sam, Arizona steps back. They don't double-dip.
What About Your Other Retirement Income?
Here is where it gets a little "kinda-sorta" tricky. While Social Security is safe, Arizona isn't a total tax haven. If you’re pulling money from a 401(k) or a Traditional IRA, the state is going to want a piece of that.
Arizona currently uses a flat tax rate of 2.5%.
It’s one of the lowest in the country, which is nice, but it’s still a bill you have to pay. If you have a private pension from a job you held back east, that’s taxable too. There are some exceptions, though. For instance, if you have a military pension, Arizona is incredibly friendly—they recently made 100% of military retirement pay tax-exempt.
The Senior Deduction Drama of 2026
If you’ve been following the local news in Phoenix or Tucson lately, you might have heard about Governor Katie Hobbs and the "Middle Class Tax Cuts Package." There’s been a lot of back-and-forth in the legislature about a new $6,000 senior deduction.
The idea is simple: give people over 65 an extra cushion.
As of right now, this is a bit of a political football. The Governor signed an Executive Order (2025-15) telling the Department of Revenue to get the forms ready just in case the legislature passes it. If it goes through, a married couple could see an extra $12,000 shaved off their taxable income. That’s huge. It would mean that even if you have a modest pension or IRA withdrawals, you might end up paying zero state tax anyway.
Property Taxes and the "Senior Freeze"
You can't talk about taxes in Arizona without talking about the house. Even if the Arizona social security tax is zero, the county assessor is still going to send you a bill every year.
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For a lot of seniors, the fear isn't the tax rate—it's the valuation. Arizona home prices have been on a wild ride. If your home value doubles, your taxes usually follow.
That’s why you need to know about the Senior Property Valuation Protection, often called the "Senior Freeze." If you’re at least 65 and have lived in your home for at least two years, you might be able to lock in your property value.
- The Income Catch: You have to make less than a certain amount. For 2026, the limits are roughly $47,712 for a single owner and $59,640 for two or more owners.
- The Deadline: You usually have to apply between January and September, depending on your county (Pima and Maricopa have slightly different windows).
- The Re-up: This isn't a "one and done" thing. You have to re-apply every three years to keep the freeze in place.
It doesn't freeze the tax rate—the city or school district can still raise that—but it stops your home's assessed value from skyrocketing. It’s a massive win for someone living on a fixed budget.
Mistakes to Avoid When Filing in Arizona
I’ve seen people make the same few mistakes year after year. First off, some folks see "Social Security" on their federal return and automatically include it on their Arizona return. Don't do that. You are literally giving the state money you don't owe them.
Secondly, watch out for the "other" pensions. While military pay is exempt, and state/local government pensions (like ASRS) get a small $2,500 deduction, private company pensions are fully taxable at that 2.5% rate.
Lastly, don't forget the Increased Standard Deduction. Thanks to some recent alignment with federal laws (the OBBB Act), the standard deduction for 2025 and 2026 is higher than it used to be. For most people, it's around $15,750 for individuals. If you’re over 65, you get an extra bump on top of that.
Actionable Next Steps for Arizona Retirees
If you're sitting at your kitchen table trying to make sense of all this, here is exactly what you should do right now:
- Check your 1099-SSA: Look at how much you’re getting. Remember, for Arizona purposes, this number is $0.
- Verify your age for the Senior Freeze: If you turned 65 recently, call your County Assessor's office. In Maricopa, it’s the Assessor’s office in downtown Phoenix. In Pima, it’s the office in Tucson. Ask for the "Value Protection Option" form.
- Track the $6,000 Deduction: Keep an eye on the news regarding Governor Hobbs’ tax package. If it passes, you’ll want to make sure your tax preparer knows to claim that extra $6,000 (or $12,000 for couples) on your 2025/2026 returns.
- Audit your withholding: If you're worried about a surprise bill because of your IRA or 401(k) withdrawals, you can ask your provider to withhold 2.5% for Arizona. It’s better than writing a big check in April.
Arizona remains one of the most tax-friendly spots for seniors. By keeping Social Security off the table and pushing for more senior-specific deductions, the state is making a clear play to keep retirees exactly where they are—enjoying the sun without the tax burn.