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Arizona can be considered a favorable retirement destination for a number of reasons, particularly its numerous natural wonders and cultural activities. Some of the more practical and quantifiable advantages of choosing one of this southwestern state’s retirement communities are the various tax benefits for retirees in Arizona.
Individuals 65 and older in the state of Arizona are eligible to receive the state Department of Revenue’s property tax credit. Any retiree who is receiving Supplemental Security Income (SSI) is also eligible for this credit, regardless of age.
You must also have been a resident of the state for the entire calendar year you’re claiming credit, from January 1 to December 31. As long as you file by the Arizona state tax deadline of April 18th, you’ll be able to receive this credit with no trouble.
Retirees who are under 65 and ineligible for the Arizona property tax credit may nevertheless still be able to relieve their tax burden. The excise tax credit can apply to any retiree who was a resident of Arizona for the entirety of the year she is filing for, as long as she’s not claiming the property tax credit.
The other primary requirement for this tax credit is your federal adjusted gross income for the year. As of 2010, Arizona mandates a maximum yearly income of $25,000 for jointly-filed returns and returns filed by a head of household. If you’re filing as a single individual or are married and filing separately, $12,500 is the maximum income for this credit.
Additional requirements, which are somewhat arcane but nevertheless worth knowing, include not being sentenced to any prison during the year for 60 days or more and not being claimed as a dependent by another taxpayer.
If you are receiving pension benefits from any agency of the U.S. Government or the U.S. armed forces, up to $2,500 of the income from this pension is exempt from taxation.
You may also be able to write off your moving expenses on your Arizona tax return. To do so, you must be able to claim that the expenses are exempt under federal Internal Revenue Service (IRS) criteria. You’ll also need to establish official legal residence in the state when retiring in Phoenix or Tucson, Arizona, or anywhere else in the state, for this benefit to apply.