Arizona provides specific tax treatment for Social Security benefits and Railroad Retirement Board (RRB) benefits. These benefits are excluded from Arizona taxable income, meaning they are not subject to state income tax. This exclusion applies to Social Security income received under Title II of the Social Security Act and railroad retirement benefits received from the Railroad Retirement Board under the Railroad Retirement Act.
Eligible Subtractions
- Social Security Benefits: Fully subtracted from Arizona taxable income.
- Railroad Retirement Benefits (RRB): Fully subtracted from Arizona taxable income.
Important Notes
It should be added that Only the amount of Social Security Benefits and/or Railroad Retirement Benefits that were Federally Taxed, should be subtracted from the AZ return. Additionally, while Arizona excludes these benefits, it is important to note that federal tax rules may still apply to Social Security and RRB benefits depending on your income level and filing status.
Source:
PUBLICATION 10.pdf (Arizona Department of Revenue)
Disclaimer: Always verify with the current Federal and State Department of Revenue Forms and Instructions. Tax laws may change annually. For complex situations, consult a CPA or tax attorney.