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ARIZONA STATE SENATE
Fifty-Fifth Legislature, First Regular Session
REVISED
veterans' income tax; exemption
Purpose
Exempts uniformed service members' retired pension benefits from gross income calculation for Arizona state income tax purposes.
Background
For taxable years after 2018, $3,500 of benefits, annuities and pension payments to retired or retained uniformed service members are not included when calculating the service members' Arizona adjusted gross income (A.R.S. § 43-1022). The remaining amount of benefits, annuities and pension payments are subject to be taxed at the regular Arizona income tax rate.
Members of the uniformed services include members of the U.S. Military, the U.S. Public Health Service Commissioned Corps and the National Oceanic and Atmospheric Administration Commissioned Officer Corps (37 U.S.C. § 101).
According to a Joint Legislative Budget Committee fiscal note on an identical measure, S.B. 1359, the anticipated fiscal impact of this legislation would be $48,300,000 beginning in FY 2022 (JLBC Fiscal Note).
Provisions
1. Exempts, for taxable years from and after 2020, the full amount of benefits, annuities and pensions received as retired or retainer pay of the uniformed services of the United States from Arizona's adjusted gross income.
2. Becomes effective on the general effective date, retroactive to taxable years beginning from and after December 31, 2020.
Revisions
ˇ Updates the fiscal impact statement.
Prepared by Senate Research
February 1, 2021
LMM/DH/kja