Arizona Has a Tax Friendly Climate for Retirement

If you are thinking about retiring in the Phoenix you will be happy to discover that Arizona has a moderately friendly tax climate for retirement, even though it does have both an income and a sales tax. One reason is that Arizona has relatively low property taxes and some protections for people over 65


Overall Tax Burden

Arizona's state tax burden is very low as compared to the rest of the U.S. 41th overall according to The Tax Foundation. That organization estimates its total tax burden at 8.5% of income.


Income Tax

Arizona has 5 tiers of income tax, with the highest rate (4.54%) applying to incomes of $150,000 and more. Taxpayers over 65 are eligible for a $2100 exemption.



AZ is a somewhat tax-friendly state for retirement in that in state pensions, social security benefits, and some military pensions are exempt.


Property Tax

Arizona collects property taxes at both the state and local level. Property taxes are slightly below average; AZ ranks 35th in property taxes collected. Seniors who meet certain requirements for income and residency (2 years) enjoy the "freezing" of the valuation for their primary residence.


Sales Tax

Arizona sales tax is 5.6%, about average for the U.S. Gasoline taxes are relatively low compared to the rest of the nation, cigarette taxes are high.



Frequently Asked Tax Questions about Moving to Arizona