State guide
Does Arizona tax retirement income? IRAs, Roth conversions and Social Security (2026)
By Secure Retirement PlannerUpdated
If you retire in Arizona, your Social Security is not taxed, but pensions and IRA withdrawals are taxed at a flat 2.5% for 2026. Your Roth conversion is taxed the same way, as ordinary income. That means each $10,000 you convert adds about $250 in state tax, once your Arizona taxable income is above zero.
The state's 2026 estimated tax instructions confirm the 2.5% rate. Arizona has no general break for IRA income, but it does not tax your Social Security. A big conversion can also mean you owe Arizona estimated tax payments during the year.
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The short version
- Arizona taxes your conversion at a flat 2.5% in 2026, the same rate on every dollar.
- If you convert $50,000, you add about $1,250 in Arizona tax.
- Arizona does not tax your Social Security or railroad retirement benefits.
- The $2,500 public pension exclusion covers government pensions, not your IRA conversion.
- A large conversion can push you over Arizona's income line for estimated tax payments.
Does Arizona tax retirement income?
Partly. Arizona leaves your Social Security alone. Your pensions, IRA and 401(k) withdrawals and Roth conversions are taxed at the flat 2.5% rate. Certain public pensions get a small break of up to $2,500 per person.
| Income type | Taxed by Arizona in 2026? | Notes |
|---|---|---|
| Social Security | No | Railroad retirement is not taxed either |
| Public pensions | Yes, after a small break | Up to $2,500 per person from certain U.S. and Arizona government plans is excluded |
| Private pensions | Yes | Flat 2.5% |
| IRA and 401(k) withdrawals | Yes | Flat 2.5%, with no Arizona subtraction for IRA or 401(k) income |
| Roth conversions | Yes | Flat 2.5%, about $250 per $10,000 converted |
Does Arizona tax a Roth conversion?
Yes. Arizona starts from your federal adjusted gross income, and that includes the amount you convert. There is no Arizona subtraction for IRA or 401(k) income. So your conversion is taxed like your other income.
Arizona has one rate for everyone. The state's 2025 Form 140 booklet lists a 2.5% rate for all income levels and filing statuses. The 2026 estimated tax form uses the same 2.5%.
A flat rate makes your math easy. Your state cost is about 2.5% of what you convert, as long as your Arizona taxable income was already above zero.
| Conversion | Arizona tax |
|---|---|
| $10,000 | about $250 |
| $25,000 | about $625 |
| $50,000 | about $1,250 |
| $100,000 | about $2,500 |
What retirement income does Arizona exclude?
Arizona doesn't tax your Social Security or railroad retirement benefits. If they show up in your federal income, you subtract them on your Arizona return.
Arizona also lets each spouse subtract up to $2,500 of pension income from certain public sources. These include the U.S. Civil Service Retirement System and Arizona state or local government plans. That break is only for those pensions. It does not cover your IRA payouts or conversions.
Arizona gives you a $2,100 exemption for each person 65 or older, based on the 2025 Form 140. That lowers your taxable income. It doesn't change the 2.5% rate on your conversion.
Will a conversion make me pay Arizona estimated tax?
It can, and that surprise bill is worth planning for. You must make estimated payments if two things are true. Your Arizona gross income was over $150,000 (married filing jointly) or $75,000 (other filers) last year. And you expect it to be over that amount this year.
Your conversion counts toward gross income. Say you and your spouse have $110,000 of other income and convert $50,000. You land at $160,000. If that happens two years in a row, you must make Arizona estimated payments.
Arizona's 2026 due dates are April 15, June 15 and September 15, 2026, and January 15, 2027. Your payments plus withholding should cover 90% of your 2026 tax or 100% of your 2025 tax.
I'm moving to Arizona. Does it matter when I convert?
It can, depending on where you're coming from. If you move to Arizona during 2026, you file as a part-year resident (Form 140PY). A conversion you do while you live in Arizona is Arizona income at 2.5%.
If your old state has a higher rate, converting after you become an Arizona resident may cost you less. Say you come from California. A conversion after the move is generally not California income. See California for California's rules.
Federal law (4 U.S.C. 114) bars a state from taxing IRA and retirement plan income of people who no longer live there. That protects you from your old state once you've left.
How much federal tax goes with the Arizona tax?
Your federal tax is usually the larger piece. In 2026 the federal 12% bracket for couples ends at $100,800 of taxable income. Above that, your conversion dollars are taxed at 22% until $211,400.
Pick your amount with both taxes in mind. Our guide to How much to convert each year explains how you can fill a bracket on purpose.
Example: a Scottsdale couple converting $50,000
Linda, 64, and Rick, 63, file jointly and haven't started Social Security. They expect $110,000 of other income in 2026 from Rick's private pension and IRA withdrawals. They convert $50,000 from Linda's IRA.
Their federal taxable income goes from $77,800 to $127,800. That puts $23,000 of the conversion in the 12% bracket and $27,000 in the 22% bracket. That adds about $8,700 in federal tax.
Arizona adds 2.5% of $50,000, about $1,250. Their Arizona gross income is now $160,000. If they also topped $150,000 in 2025, they need to make 2026 Arizona estimated payments.
What this means for you: in Arizona the state piece is small and easy to predict. Your federal bracket is what sets your best amount.
| Conversion | Added federal tax | Added Arizona tax | Total |
|---|---|---|---|
| $25,000 | about $3,200 | about $625 | about $3,825 |
| $50,000 | about $8,700 | about $1,250 | about $9,950 |
| $100,000 | about $19,700 | about $2,500 | about $22,200 |
Hypothetical example. Assumes married filing jointly, both under 65, no Social Security, $110,000 of other income that doesn't qualify for Arizona's public pension exclusion, the 2026 federal standard deduction ($32,200) and 2026 brackets (IRS Rev. Proc. 2025-32). Arizona tax uses the 2026 flat 2.5% rate. It ignores Medicare IRMAA and credits. Your numbers will differ.
Common questions
Does Arizona tax Roth conversions?
Yes. The amount you convert is Arizona taxable income, taxed at the flat 2.5% rate for 2026.
Does Arizona tax Social Security?
No. Arizona does not tax your Social Security benefits under Title II of the Social Security Act, or your railroad retirement benefits.
Can I use Arizona's $2,500 pension exclusion on a conversion?
No. That break is for pensions from certain U.S. government and Arizona state or local government plans. It does not cover your IRA payouts or conversions.
Is Arizona's rate really the same at every income?
Yes. Arizona's 2025 and 2026 forms use a single 2.5% rate for all income levels and filing statuses.
When are Arizona estimated payments due for 2026?
April 15, June 15 and September 15, 2026, and January 15, 2027, if you meet Arizona's income thresholds.
Are qualified Roth withdrawals taxed in Arizona later?
No. Arizona starts from your federal adjusted gross income, and your qualified Roth withdrawals aren't in federal income.
Sources
Facts on this page were last checked on November 9, 2026.
- Arizona Department of Revenue, 2026 Form 140ES booklet · 2.5% rate for 2026, estimated tax thresholds, due dates, safe harbor. Read Nov 9, 2026.
- Arizona Department of Revenue, 2025 Form 140 Resident Personal Income Tax booklet · Flat rate, Social Security subtraction, $2,500 public pension exclusion, age 65 exemption, part-year filing. Read Nov 9, 2026.
- 4 U.S.C. 114, limitation on state income taxation of certain pension income · States can't tax nonresidents' IRA and plan income. Read Nov 9, 2026.
- IRS Rev. Proc. 2025-32 (2026 inflation adjustments) · 2026 federal brackets and standard deduction. Read Nov 9, 2026.
Who wrote this
This guide was written and fact-checked by the Secure Retirement Planner editorial team using IRS, CMS and Social Security sources listed above. We update guides when the law or yearly limits change. How we research.