Arizona veteran taxes

Military retired pay in Arizona

Exempttax year 2025Sources 1, 2

Arizona allows a subtraction of 100% of benefits, annuities and pensions received as retired or retainer pay of the uniformed services of the United States (Form 140, line 29b). When both spouses on a joint return receive such pay, each may subtract 100%. The Department of Revenue says this applies for tax year 2021 and forward.

Survivor Benefit Plan annuities

ExemptSource 3

The 2025 Form 140 instructions say a surviving spouse of a deceased military veteran who receives payments from the uniformed services of the United States may exclude 100% of those payments. The instructions do not address payments to a surviving child.

Property tax relief for disabled veterans

Exemption or creditSources 4, 5, 6

Under A.R.S. § 42-11111, the primary residence of a resident veteran with a service-connected disability rated 100% by the U.S. Department of Veterans Affairs, or rated totally disabled based on individual unemployability, is fully exempt. A veteran with a service-connected rating below 100%, or a nonservice-connected rating of 100% or less, receives a partial exemption: the statute’s $4,188 amount, increased each year by the Department of Revenue, multiplied by the VA disability percentage. These rules apply from tax year 2026; new applications go to the county assessor between the first Monday in January and March 1.

• Full exemption of the primary residence: service-connected 100% VA rating or individual unemployability (A.R.S. § 42-11111(C)); a residence owned with the veteran’s spouse is treated as owned solely by the veteran.
• Partial exemption: $4,188 times the VA rating percentage (A.R.S. § 42-11111(D)); the Department of Revenue’s tax year 2026 abstract lists the total individual exemption at $4,873. The assessed value limit no longer applies to the veteran exemptions.
• Unused exemption may be applied against the vehicle license tax and other personal property subject to special property taxes (A.R.S. § 42-11111(M)).
• The Department of Revenue FAQ says the household income limitation still applies to all individual exemptions in A.R.S. § 42-11111; the statute text (subsection J) ties the income limit to the subsection E exemption for widows, widowers and persons with a total and permanent disability.

Vehicle registration for disabled veterans

Fee waiver or discountSource 7

Under A.R.S. § 28-5802, no vehicle license tax or registration fee is collected for one personally owned vehicle of a veteran certified by the U.S. Department of Veterans Affairs as having a 100 percent disability and drawing compensation on that basis. The same applies to a vehicle acquired with VA financial aid. The surviving spouse may renew under the exemption until remarriage or death.

• One vehicle or any replacement of it; proof of the VA 100 percent determination is presented at initial registration (A.R.S. § 28-5802(B)).
• Separate one-vehicle exemption from vehicle license tax and registration fee for honorably discharged Purple Heart recipients (A.R.S. § 28-5802(C)).