Arizona taxes and cost of living (2026)
Arizona has a flat 2.50% income tax. A $100,000 salary is worth about $69,065 a year in national buying power after every tax and Arizona's prices, #30 of 51 (the state average is $70,397). Retiring on $50,000 a year takes about $1.31M, #34 lowest.
- State income tax
- 2.50%
- Sales tax (avg. combined)
- 8.54%
- Property tax (effective)
- 0.43%
- Cost of living
- 100.7
- US = 100
- Social Security taxed?
- No
- Median home
- $426K
Take-home pay in Arizona
Single filer, 10% of salary to a pre-tax 401(k), standard deduction, renting. All taxes include estimated sales tax.
| Salary | Federal | FICA | State + local | All-in tax rate | Take-home | In US dollars |
|---|---|---|---|---|---|---|
| $50,000 | $3,220 | $3,825 | $723 | 16.9% | $37,233 | $36,982 |
| $75,000 | $6,020 | $5,738 | $1,285 | 18.8% | $54,458 | $54,091 |
| $100,000 | $10,970 | $7,650 | $1,848 | 21.8% | $69,533 | $69,065 |
| $150,000 | $21,134 | $11,475 | $2,973 | 25.1% | $99,419 | $98,750 |
| $250,000 | $43,304 | $15,514 | $5,223 | 27.0% | $160,960 | $159,877 |
What it takes to retire in Arizona
Married couple, age 60, withdrawals 60% from 401(k)/IRA, 20% Roth, 20% brokerage, no Social Security yet, renting. Spending at US-average prices.
| Spending | At AZ prices | Income taxes | All taxes | FI number |
|---|---|---|---|---|
| $40,000 | $40,271 | $0 | $1,101 | $1.01M |
| $60,000 | $60,406 | $670 | $2,321 | $1.53M |
| $80,000 | $80,542 | $2,347 | $4,548 | $2.07M |
| $120,000 | $120,812 | $6,116 | $9,417 | $3.17M |
Arizona tax rules at a glance
- Income tax: Arizona has a flat 2.50% income tax. Flat 2.5%. HB 4168 (signed June 13, 2026) conformed Arizona to OBBBA (IRC as of 1/1/2026), raising the std deduction base to $15,750 / $31,500 retroactive to TY2025 and indexed; the 2026 figure shown assumes it tracks the federal $16,100 / $32,200 (not yet confirmed by ADOR). Before HB 4168, Tax Foundation reported pre-OBBBA amounts of $8,350 / $16,700 for 2026. HB 4168 also adds mandatory subtractions for qualified tips, overtime and the $6,000 senior deduction, caps SALT itemized deduction at $10,000, and raises the dependent credit to $125 (under 17). Std deduction can be increased by a share of charitable gifts.
- Local income tax: No local income taxes.
- Social Security: Not taxed. Social Security fully exempt.
- Retirement income: Up to $2,500 subtraction for Arizona state/local and federal government pensions; military retirement pay fully exempt. Private pensions and IRA/401k distributions taxable. Age 65+ filers also get the federal-conforming $6,000 senior subtraction (2025-2028).
- Capital gains: Subtraction of 25% of net long-term capital gains on assets acquired after Dec 31, 2011; otherwise taxed at the flat 2.5%.
- Sales tax: 5.60% state rate, 8.54% average with local taxes; groceries exempt.
Compare Arizona with
Frequently asked questions
Does Arizona have a state income tax?
Arizona has a flat 2.50% income tax. Flat 2.5%. HB 4168 (signed June 13, 2026) conformed Arizona to OBBBA (IRC as of 1/1/2026), raising the std deduction base to $15,750 / $31,500 retroactive to TY2025 and indexed; the 2026 figure shown assumes it tracks the federal $16,100 / $32,200 (not yet confirmed by ADOR). Before HB 4168, Tax Foundation reported pre-OBBBA amounts of $8,350 / $16,700 for 2026. HB 4168 also adds mandatory subtractions for qualified tips, overtime and the $6,000 senior deduction, caps SALT itemized deduction at $10,000, and raises the dependent credit to $125 (under 17). Std deduction can be increased by a share of charitable gifts.
How much is $100,000 after taxes in Arizona?
A single filer earning $100,000 who puts $10,000 in a 401(k) takes home about $69,533 after federal, state and local income taxes and payroll taxes, an all-in effective rate of 21.8% including estimated sales tax.
Does Arizona tax Social Security?
No. Arizona does not tax Social Security benefits. Social Security fully exempt.
How much do you need to retire in Arizona?
To spend $50,000 a year (at US-average prices) with withdrawals mostly from a 401(k)/IRA, you'd need about $1.31M in Arizona using the 4% rule, after its cost of living and taxes.
Is Arizona expensive to live in?
Arizona's cost of living index is 100.7, where the US average is 100 (BEA Regional Price Parities, 2024). The median home is worth about $426,000 and median rent is $1,672 a month.
How this is calculated
- Income taxes use 2026 federal and state brackets, standard deductions and personal exemptions or credits. No itemized deductions or other credits. Local income taxes use a typical statewide rate (for example, Maryland's county taxes or New York City's); many places have none.
- Payroll taxes include Social Security (6.2% up to the wage base), Medicare, and employee-paid state programs such as California SDI or Washington's paid leave premium. A married household salary is treated as two equal earners for payroll-tax caps.
- Cost of living uses the Bureau of Economic Analysis's Regional Price Parities (2024), where the US average is 100. Spending you enter at national prices is scaled by each state's index.
- Sales tax is estimated as the average combined state and local rate on about a third of spending (more where groceries are taxed). It is shown for context but not added to costs, because the price parities already include it. Property tax applies the state's effective rate to its median home value (Census ACS 2024) if you own.
- Retirement solves for the withdrawal that covers your spending plus the taxes it triggers, using each state's treatment of Social Security, retirement-account withdrawals and capital gains, then multiplies by 25 (a 4% withdrawal rate).
- Years to FI starts from zero, adds what you save each year in that state, and grows it at a 5% real return until it reaches that state's FI number.
Estimates for comparison, not tax advice. Your actual taxes depend on deductions, credits, where in the state you live and more. Sources: BEA Regional Price Parities, Census ACS, state sales tax rates, IRS, state revenue departments (per state).