What benefits do veterans get in Arizona?
By Kyle Melvin · NMLS #1486450 · REV Mortgage · Licensed in Arizona ·
Short answer
Arizona's main benefit for veteran homeowners is a property tax exemption under A.R.S. § 42-11111, restored by voters in 2022 through Proposition 130 after courts had struck the earlier version. It is a full exemption of the primary residence for veterans rated 100% or classed as totally disabled based on individual unemployability, and a partial, rating-scaled exemption below that, with the below-100% amounts set by statute rather than by a value or income test — and it stacks on an ordinary VA loan, since Arizona has no state veteran mortgage program.
- State
- Arizona
- State loan program
- None — federal VA loan only
- Installations covered
- Luke Air Force Base
- Licensing
- Kyle Melvin is licensed in Arizona
Arizona's veteran benefit has a complicated recent history, and a buyer needs to know the current version rather than the one that circulates in older content. The disabled veteran property tax exemption that existed for decades was struck down in court because it required the veteran to have been an Arizona resident before entering service. Voters fixed the constitutional problem in 2022 with Proposition 130, and the legislature restored the exemption under A.R.S. § 42-11111 with new amounts and limits. It is a real benefit, it is partial, and its thresholds are being adjusted — which is why this page describes the structure and tells you what to verify.
The exemption
A.R.S. § 42-11111 exempts a portion of the assessed value of property owned by a veteran with a service-connected disability, scaled to the disability percentage as rated by VA. The features that matter:
- Scaling. The exempt amount is proportional to the disability rating; a 100% rating receives the full statutory amount and lower ratings receive a proportional share.
- No income limit for veterans. The income test in § 42-11111 applies to widows, widowers and persons with a total and permanent disability, not to veterans claiming under the veteran provisions.
- Residency. The pre-service Arizona residency requirement is gone; current Arizona residency and ownership are required.
- Surviving spouse. Widows and widowers have a related exemption under the same section.
- Application. With the county assessor, with the VA rating letter and an income affidavit, on the assessor's schedule — usually early in the calendar year for that tax year.
There is no value or income gate for veterans: a 100%-rated veteran qualifies regardless of the home's value, in Scottsdale as in Goodyear. Below 100%, the exempt amount is a fixed statutory figure scaled to the rating — confirm the current figure with the county assessor in the year you buy.
Arizona veteran benefits at a glance
| Benefit | Authority | Who qualifies | Effect |
|---|---|---|---|
| Disabled veteran property tax exemption | A.R.S. § 42-11111 | Service-connected disability | 100% or TDIU: fully exempt. Below 100%: fixed statutory amount scaled to rating. No value or income limit. |
| Surviving spouse exemption | A.R.S. § 42-11111 | Widows and widowers, subject to the statute's value and income tests | Portion of assessed value exempt |
| Military retirement subtraction | A.R.S. § 43-1022 | Military retirees | Retirement pay exempt from state income tax |
| VA loan | Federal | Any eligible veteran or service member | No down payment, no mortgage insurance; funding fee waived with a compensable rating |
What it does to a payment
The lender escrows on the current bill, and the exemption is not reflected until the assessor processes it — so the first months after closing carry the un-exempted payment, then the escrow is re-analyzed. Arizona's property tax rates are moderate by national standards, so the dollar effect of a partial exemption is real but smaller than a full exemption in a high-tax state; the value and income limits also mean a lot of buyers will not qualify. Do not build the exemption into the qualifying math until the assessor confirms it.
Stacking with the VA loan
Arizona has no state-run veteran mortgage program. The loan is an ordinary VA loan: the VA loan guidelines apply, the funding fee is waived at any compensable rating, and full entitlement means no VA loan limit — which matters in the north Phoenix and Scottsdale bands. If you are arriving on orders at Luke, Davis-Monthan or Fort Huachuca, the PCS Home Buying Guide has the timeline.
Where this applies
The Luke AFB guide is the Phase 2 Arizona base page, and it links back here. Davis-Monthan and Fort Huachuca are mapped for later phases.
Arizona base guides
Questions people also ask
- Do disabled veterans pay property taxes in Arizona?
- It depends on the rating. A veteran rated 100%, or classed as totally disabled based on individual unemployability, is fully exempt on the primary residence — as in Texas or Florida. Veterans rated below 100% receive a fixed exemption scaled to the rating.
- What changed with Proposition 130?
- Arizona's earlier veteran exemption was ruled unconstitutional because it required Arizona residency before entering service. Proposition 130, approved in 2022, amended the constitution to let the legislature set exemptions and restored the disabled veteran exemption without that residency requirement, with amounts and limits set by statute.
- Does Arizona tax military retirement?
- No. Arizona fully exempts military retirement pay from state income tax under A.R.S. § 43-1022, which is part of why retirees choose the state.
Apply with Kyle
Buying in Arizona?
Kyle is licensed here and stacks the state benefits on the VA loan as part of the file, not as an afterthought. Start with your COE and the state you are moving to.