Arizona
#23
retiree-friendly rank
- Social Security
- SS exempt from state tax
- Retirement income
- Retirement income taxed
- Death tax
- None
Prop 0.48% · Sales 8.54%
2026Arizona vs Illinois Retirement Taxes
Illinois ranks more retiree-friendly than Arizona on Social Security, retirement-income, and estate/inheritance treatment. Compare Social Security, pensions and IRA withdrawals, estate/inheritance taxes, and supporting property and sales rates.
By Sammy S. · Founder · AuthorUpdated for 2026
More retiree-friendly on this model
Illinois ranks ahead
Illinois ranks #14 vs #23 for Arizona. Score gap: 1.50 (lower score = more friendly).
Side-by-side retirement tax scoreboard
Illinois
#14
retiree-friendly rank
- Social Security
- SS exempt from state tax
- Retirement income
- Retirement income exempt
- Death tax
- Estate tax
Prop 1.88% · Sales 8.98%
Retirement tax metric comparison
Rankings emphasize income and death taxes. Property and sales rates matter for cash flow but do not drive the retiree-friendliness score.
| Metric | Arizona | Illinois |
|---|---|---|
| Retiree-friendly rank | #23 | #14 |
| Social Security | SS exempt from state tax | SS exempt from state tax |
| Retirement income | Retirement income taxed | Retirement income exempt |
| Estate / inheritance | None | Estate tax |
| Estate exemption | — | $4M |
| Estate top rate | — | 16% |
| Effective property tax | 0.48% | 1.88% |
| Combined sales tax | 8.54% | 8.98% |
State rules explained
Why Arizona and Illinois differ for retirees
The gap is rarely one rule. Social Security thresholds, pension exclusions, and estate taxes can each flip which state looks better for a given household.
Arizona rules
Exempts Social Security; taxes most other retirement distributions.
Arizona does not tax Social Security benefits at the state level. Federal tax rules still apply.
Social Security exempt. Pensions, IRA, and 401(k) withdrawals generally taxed at the flat state rate.
- Property
- 0.48%
- Sales
- 8.54%
Illinois rules
Taxes wages but fully exempts Social Security and most retirement distributions; still has an estate tax.
Illinois does not tax Social Security benefits at the state level. Federal tax rules still apply.
Pensions, IRA, 401(k), and Social Security are generally exempt from Illinois income tax.
Estate tax: exemption about $4M, top rate about 16%.
- Property
- 1.88%
- Sales
- 8.98%
Income mix matters
A household living mostly on Social Security may prefer different rules than one drawing large IRA RMDs. Compare Arizona and Illinois against your actual income mix.
Death taxes are separate
Federal estate tax can still apply above about $15M. State estate or inheritance tax is an extra layer in some states.
Property & sales still count
Arizona property 0.48% vs Illinois 1.88%; sales 8.54% vs 8.98%.
Compare a different pair
Compare any two states
Social Security, pensions/IRA, estate taxes, and supporting property/sales rates.
Related tools
Estimate federal retirement figures
Use Social Security and RMD tools, then apply each state's rules from this comparison.
Arizona vs Illinois retirement tax FAQs
Illinois ranks more retiree-friendly on this site's Social Security, retirement-income, and estate/inheritance score. Also compare property tax (0.48% vs 1.88%) and combined sales tax (8.54% vs 8.98%).
Arizona: ss exempt from state tax. Illinois: ss exempt from state tax. Federal Social Security tax rules apply in both states.
Arizona: retirement income taxed. Illinois: retirement income exempt.
Arizona: no estate tax. Illinois: estate tax (exemption about $4M).
Not always. Property taxes, sales taxes, and estate taxes can offset income-tax savings. Compare total household exposure, not income tax alone.
Federal income tax, Medicare IRMAA surcharges, and the federal estate tax framework do not depend on the state of residence in the same way state income tax does. State rules sit on top of federal rules.
Related retirement tax comparisons
Educational comparison only. Confirm current state return instructions and estate planning rules before relocating.