Starting in 2026, Arizona retirees will receive substantial tax relief through a new federal law. This legislation introduces a senior tax deduction that exempts most Social Security benefits from federal income tax. The adjustment will increase the number of seniors who can exclude Social Security from their taxable income from 64% to 88%, which translates to an additional 14.2 million retirees. In Arizona, 1.3 million seniors are expected to benefit from this change, significantly impacting their financial stability as it enables many to age in place.
The big beautiful bill passed in 2025 raised the share of seniors who won't pay federal income tax on Social Security from 64% to 88%, according to the White House.
Arizona's senior population is one of the largest in the country, home to 1.43 million retirees, accounting for 19.35% of the state's population.
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