PHOENIX â Gov. Doug Ducey is proposing to give a small tax cut to military retirees as a method of fulfilling his 2014 campaign promise to propose lower taxes every year he is in office.
Current law exempts the first $2,500 of military pensions from state taxes. Ducey said that figure has not been updated since 1989.
The governor did not spell out in the speech how much he wants that increased. But in a separate press release, Ducey said he wants that raised over the next two years to $10,000.
How much of a difference that might make would depend on how much the retiree is getting in pensions.
Arizona's tax rates vary from 2.59 to 4.54 percent for amounts of income above $150,000 for individuals and $300,000 for couples.
Assuming a middle blended rate in the 3.3 percent rate, each $1,000 reduction in taxable income translates to a $33 savings in state taxes owed.
Ducey said there are about 52,000 Arizonans getting federal pensions who would be affected.
