Active-duty and reserve pay
Pay for service in the active or reserve components of the U.S. armed forces is not taxed.
An E-5 with over 6 years of service earns $49,320 a year in basic pay. In Arizona, that pay is normally excluded from state income tax. Housing and food allowances are never taxed by any state.
Military retired pay
Military retired pay is exempt.
Your state of legal residence decides
Military pay is taxed by your state of legal residence, usually the state you lived in when you joined or one you later adopted by changing your records, not by the state where you are stationed. This comes from the Servicemembers Civil Relief Act. Spouses can choose to use the member's state of legal residence for their own income too.
See your total pay with state tax
Questions
Does Arizona tax military pay?
Arizona does not tax active-duty military pay. Pay for service in the active or reserve components of the U.S. armed forces is not taxed.
Does Arizona tax military retirement pay?
Military retired pay is exempt.
Is BAH taxed in Arizona?
No. BAH and BAS are not taxable income for federal or state tax in any state.
Which state taxes me if I am stationed in Arizona?
Under the Servicemembers Civil Relief Act, your military pay is taxed only by your state of legal residence, not the state where you are stationed. If Arizona is not your legal residence, Arizona does not tax your military pay.