Updated September 4, 2026. Quick answer: Partially. Arizona exempts up to $2,500 of combined public pension and federal government pension income, but private pensions and IRA/401(k) distributions are fully taxable with no exclusion at all. Military retirement pay is fully exempt.
Federal civil service pensions in Arizona: does Arizona tax federal pensions.
State retirement-income forms, line by line: Arizona Form 140 line 29a.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Arizona tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Arizona tax 403(b) and 457(b) withdrawals.
The corrections officer plan (CORP), with its refund and survivor rules from its own handbook: Arizona CORP retirement decisions.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Arizona tax withholding on pension payments.
Selling your home? How the state taxes the profit, from its own tax documents: Does Arizona tax the profit from selling your home?.
The state’s income tax schedule: the Arizona 2026 tax brackets (pending).
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Arizona tax withholding on IRA and 401(k) withdrawals.
A pension earned in another state, or paid after a move, is covered here: does Arizona tax out-of-state pensions.
The Phoenix COPERS survivor options and refund rules, from the system’s own documents: Phoenix COPERS retirement decisions.
Trusts have their own page: does Arizona tax trust income.
Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does Arizona have an inheritance tax?.
Dividends and interest have their own page: does Arizona tax dividends and interest.
Making a gift or planning an estate? The state’s gift tax answer, from its own tax documents: Does Arizona have a gift tax?.
Annuity payments have their own page: does Arizona tax annuity income.
Planning for what you leave behind? The state’s estate tax answer, from its own tax documents: Does Arizona have an estate tax?.
Military retired pay has its own page: does Arizona tax military retirement.
Saving for a child’s college? The state’s 529 break has its own page: Arizona 529 plan tax deduction.
Selling stocks, funds or real estate has its own page: does Arizona tax capital gains.
Withdrawals from a 401(k) or IRA have their own page: does Arizona tax 401(k) and IRA withdrawals.
The PSPRS DROP and refund rules, from the system’s own pages: PSPRS retirement decisions.
The ASRS survivor annuity, lump sum and refund, from the statutes: ASRS retirement decisions.
Looking for Social Security instead of pensions? See does Arizona tax Social Security.
Related guides on this topic: Advisor For A Pension Decision and Why Your Pension Lump Sum Moved When Rates Did.
Related state retirement tax guides: Hawaii to Arizona Retirement Taxes.
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Arizona taxes retirement income generally.
Pending, not current law: A 2025 bill (SB1371) proposing an age-67+ subtraction only reached committee passage (“AS PASSED BY COMMITTEE”) and was never enacted into law; do not treat it as current.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Partially exempt: up to $2,500 total (combined with federal pensions below), no age or income test. |
|---|---|
| Private (employer) pensions | Fully taxable. The $2,500 subtraction’s enumerated list of 36 numbered paragraphs names only government retirement systems, not private employer plans. |
| Federal government pensions (FERS/CSRS) | Partially exempt, sharing the same $2,500 combined cap as public pensions above. |
| Military retirement pay | Fully exempt (100%) for tax years beginning after December 31, 2020, phased up from $2,500 (through 2018) to $3,500 (2019 to 2020) to the full amount (2021 forward). |
| IRA and 401(k)/403(b) distributions | Fully taxable. No subtraction exists anywhere in the statute’s 36 numbered paragraphs. |
| General retirement-income exclusion | None in current law. A 2025 bill (SB1371) that would have created an age-67+ subtraction only reached committee passage and was never enacted. |
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Social Security is never taxed by Arizona. Social Security has its own rules in every state; see the full breakdown in how Arizona taxes retirement income generally.
Figures verified against A.R.S. sec. 43-1022 as published at azleg.gov; the status of SB1371 (2025) was not re-checked on September 30, 2026.
Statute and sources
Governing citation: A.R.S. sec. 43-1022, paragraphs 2 and 26.
Read September 4, 2026.
Related: how Arizona taxes retirement income generally · does Arizona tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.