Property Tax Exemptions By Disability Rating
Arizona Disabled Veteran Property Tax Exemptions in 2026
ARS §42-11111, Disabled Veteran Exemption
Maricopa County Assessor, Valuation Relief
Arizona DOR, Property Tax FAQs
Arizona offers a full property tax exemption for 100% service-connected disabled Veterans, but it comes with an income test and requires annual reapplication. On a $350,000 home in Pima County at 0.95%, the full exemption saves $3,325 per year or $277 per month. Arizona’s baseline rates are among the lowest in the country at ~0.51% statewide, so even without the exemption your tax burden is manageable, and with it, your VA loan payment drops meaningfully.
100% P&T Exemption
- Full property tax exemption, $0 tax on primary residence regardless of home value
- Income limit: $39,865 qualifying income ($47,826 with minor children), VA disability pay, Social Security, and Military pensions are excluded
- Must reapply annually between January 2 and March 1
- File with your county assessor with VA Summary of Benefits Letter
Partial Disability (10-90%)
- $4,873 base assessed value reduction multiplied by your disability percentage (2026)
- A 60% rated Veteran gets a $2,924 assessed value reduction, saves roughly $18/year
- Same income test and annual reapplication requirement applies
- File during the January 2 to March 1 window with your VA rating letter
Filing And Deadlines
- Apply between January 2 and March 1 each year, strict deadline, no extensions
- Arizona does NOT allow retroactive applications, miss the window, wait a full year
- File at your county assessor’s office with VA documentation and income verification
- Set a December calendar reminder to file before March 1
VA Loan Impact
- $0 tax escrow saves $155 to $277/month depending on county and home value
- At 6.5%, that translates to roughly $20,000 to $40,000 more in buying power
- Arizona’s low baseline rates mean the exemption impact is more modest than high-tax states
- Tell your lender about the exemption during preapproval so escrow is calculated correctly
Frequently Asked Questions
How much does a 100% disabled Veteran save on property tax in Arizona?
A 100% service-connected disabled Veteran who meets the income test pays $0 property tax on their primary residence. On a $350,000 home at Pima County’s 0.95% rate, that saves $3,325 per year, $277 per month. At the statewide average of 0.51%, a $350,000 home saves $1,785 per year.
Does VA disability income count toward the Arizona income limit?
No. VA disability compensation, Social Security benefits, and Military retirement pensions are excluded from the qualifying income calculation. Most Veterans whose primary income is VA disability pay will have qualifying income well below the $39,865 threshold.
Do I have to reapply every year in Arizona?
Yes. Arizona requires annual reapplication between January 2 and March 1. There is no auto-renewal and no retroactive filing. Missing the window means you pay full taxes for the entire year.
The Bottom Line Up Front
Arizona gives 100% service-connected disabled Veterans a full property tax exemption on their primary residence, no cap on home value. The catch is an income test ($39,865 qualifying income, or $47,826 with minor children) and a mandatory annual reapplication between January 2 and March 1. The income test is generous because VA disability pay, Social Security, and Military pensions are excluded. On a $350,000 home near Davis-Monthan AFB at Pima County’s 0.95% rate, you save $3,325 per year. Veterans with partial ratings get a modest reduction, $4,873 multiplied by your disability percentage off the assessed value.
Arizona is not the strongest state for Veteran property tax exemptions. The partial disability amounts are minimal, the annual reapplication is a hassle, and the income test adds a step that most other states skip. But the full exemption for 100% P&T Veterans is real, and Arizona’s low baseline tax rates mean your total housing cost stays competitive even before factoring in the exemption. Combined with the VA funding fee waiver and zero-down VA financing, a disabled Veteran buying near Luke AFB or Davis-Monthan still comes out ahead on monthly costs.
What To Do Based On Your Situation
- Buying a home in Arizona soon: Time your closing relative to the January 2 to March 1 filing window. If you close after March 1, you wait until the following January to apply. Tell your lender about your disability rating during preapproval.
- Already own a home in Arizona: If you have not applied, file during the next January 2 to March 1 window with your county assessor. After approval, request an escrow reanalysis from your mortgage servicer.
- Surviving spouse of an Arizona Veteran: Un-remarried surviving spouses may qualify for the same exemption. File with the county assessor with the Veteran’s VA documentation, death certificate, and marriage certificate.
What Are The Arizona Disability Rating Exemption Tiers?
Arizona’s exemption structure has a sharp cliff between partial and full disability. The partial exemption uses a base amount of $4,873 (2026) multiplied by your VA disability percentage, and that is off the assessed value, not the tax bill. The full exemption for 100% disabled Veterans eliminates the entire property tax bill.
| VA disability rating | Assessed value reduction (2026) | Annual savings on $350K home at 0.62% | Monthly PITI reduction |
|---|---|---|---|
| 10% | $487 off assessed value | $3 | $0.25 |
| 30% | $1,462 off assessed value | $9 | $0.75 |
| 50% | $2,437 off assessed value | $15 | $1.25 |
| 70% | $3,411 off assessed value | $21 | $1.75 |
| 80% | $3,898 off assessed value | $24 | $2 |
| 100% (service-connected) | Full exemption, $0 tax | $2,170 | $181 |
| Surviving spouse (100%) | Full exemption, $0 tax | $2,170 | $181 |
The partial exemption numbers speak for themselves, a 50% disabled Veteran saves roughly $15 per year. The benefit is almost entirely concentrated at the 100% level. If you are rated below 100%, the exemption filing may not be worth the annual trip to the assessor’s office. If you are at 100% and meet the income test, the benefit is meaningful.
Deal Math: A 100% P&T Veteran buying a $400,000 home near Davis-Monthan AFB at Pima County’s 0.95% effective rate saves $3,800 per year, $317 per month. Combined with the VA funding fee exemption (saving $8,600 upfront on a $400,000 loan at the 2.15% first-use rate), the total first-year benefit is $12,400. Over a 30-year mortgage, the property tax savings alone total $114,000.
What Is The Exemption Worth In Real Dollars?
The dollar value depends entirely on your county’s effective tax rate. Arizona rates range from roughly 0.45% in parts of Maricopa County to 0.95% in Pima County. The statewide average sits near 0.51%, among the lowest in the country.
| Home value | Effective tax rate | Annual tax without exemption | Annual tax with 100% exemption | Monthly savings |
|---|---|---|---|---|
| $300,000 | 0.59% (Maricopa) | $1,770 | $0 | $148 |
| $350,000 | 0.74% (Cochise) | $2,590 | $0 | $216 |
| $400,000 | 0.95% (Pima) | $3,800 | $0 | $317 |
| $500,000 | 0.59% (Maricopa) | $2,950 | $0 | $246 |
Home Search Impact: A 100% P&T Veteran shopping near Luke AFB in Maricopa County gains roughly $148 to $246 per month in payment capacity compared to a non-exempt buyer. At 6.5%, that translates to approximately $20,000 to $35,000 in additional purchasing power. Arizona’s low rates mean the exemption impact is less dramatic than in high-tax states like Texas or Illinois, but stacked on top of an already-low tax environment, your total housing cost remains among the most competitive in the Sun Belt.
How Does This Change Your VA Loan Math?
The exemption changes your VA loan qualification in measurable ways, though the impact is proportional to Arizona’s lower tax rates. Every dollar removed from the tax escrow improves your debt-to-income ratio and increases your qualifying purchase price.
- PITI impact: On a $400,000 home at 6.5% with $0 down in Pima County, removing $317/month in tax escrow drops your total PITI from approximately $2,975 to $2,658. That is a 10.7% reduction in your housing payment.
- DTI improvement: At $6,000/month gross income, that $317 reduction drops your housing DTI from 49.6% to 44.3%. On a borderline file, this can shift an AUS decision from needing compensating factors to a clean approval.
- Buying power shift: The $317 monthly savings, redirected toward principal and interest, supports an additional $40,000 to $50,000 in purchase price at 6.5% in Pima County. In Maricopa County at the lower rate, the shift is $20,000 to $35,000.
- Escrow adjustment: If you close before the exemption is approved, your lender will escrow for the full tax amount. Once approved, request an escrow reanalysis, your monthly payment decreases and the lender refunds the overage.
Who Is Eligible For The Arizona Exemption?
Arizona has both a disability requirement and an income test. Most 100% P&T Veterans pass the income test easily because the income types most Veterans rely on are excluded from the calculation.
For the full exemption, you need a 100% service-connected disability rating from the VA, Arizona residency, ownership and occupancy of the property as your primary residence, and household qualifying income under $39,865 ($47,826 with minor children). For the partial exemption, any VA disability rating qualifies, with the same income test and residency requirements.
The income exclusions are critical. VA disability compensation, Social Security benefits, and Military retirement pensions do not count toward the $39,865 threshold. If your only income is VA disability pay and Social Security, your qualifying income is likely $0. The income test primarily catches Veterans with substantial W-2 wages, self-employment income, or investment income above the threshold.
What Are The Exemption Amounts By Rating?
The partial exemption amounts are based on a statutory base of $4,873 for 2026, prorated by your disability percentage. This reduces the assessed value of the home, not the tax bill directly. Because Arizona assesses residential property at 10% of full cash value, the actual tax reduction from partial exemptions is minimal.
The meaningful benefit is at 100%. A 100% service-connected disabled Veteran receives a full exemption of the entire assessed value, which eliminates property taxes entirely. There is no cap on home value for the full exemption, a $250,000 home and a $750,000 home both qualify for zero taxes if the Veteran meets the income test.
How Do You Apply For The Arizona Exemption?
Arizona requires you to file with your county assessor’s office during a specific annual window. This is not a one-time application, you must reapply every year. The filing window runs from January 2 through March 1 for the upcoming tax year.
- Obtain your VA Summary of Benefits Letter: Download from VA.gov or request from your local VA office. The letter must confirm your disability rating and service-connected status.
- Gather income documentation: You need to demonstrate qualifying income under $39,865 ($47,826 with minor children). Because VA disability pay and Social Security are excluded, most qualifying Veterans need minimal documentation.
- File between January 2 and March 1: Submit the exemption application to your county assessor’s office. Applications received after March 1 are not processed for the current tax year.
- Reapply every year: There is no auto-renewal. Set a recurring calendar reminder for late December or early January to file before the deadline.
Process Watchpoint: The March 1 deadline is strict and Arizona does not allow retroactive applications. If you close on a home in February, you have days to file, not months. If you close after March 1, you wait until the following January to apply, meaning you pay full taxes for the remainder of that year and potentially into the next. Plan your closing date around this window whenever possible. This is one of the tightest filing deadlines of any state.
Where Do Veterans Actually File In Arizona?
You file with your county assessor, not the state, not the VA, and not the county treasurer. Arizona has 15 counties, and each processes exemption applications independently.
| Military installation | County | Approx. effective rate | Annual savings on $350K home | Median home price (2026 est.) |
|---|---|---|---|---|
| Luke AFB (Glendale) | Maricopa | 0.59% | $2,065 | $430,000 |
| Davis-Monthan AFB (Tucson) | Pima | 0.95% | $3,325 | $325,000 |
| Fort Huachuca (Sierra Vista) | Cochise | 0.74% | $2,590 | $265,000 |
| Yuma Proving Ground | Yuma | 0.72% | $2,520 | $310,000 |
Do Surviving Spouses Keep The Exemption In Arizona?
Yes. An un-remarried surviving spouse of a qualifying disabled Veteran may continue to receive the property tax exemption on the same property. The surviving spouse must meet the same income test and continue to own and occupy the home as a primary residence.
The surviving spouse must reapply annually during the January 2 to March 1 window, just like the Veteran would. If the surviving spouse remarries, eligibility ends permanently. Unlike some states, Arizona does not offer a transferable dollar-amount exemption to a new homestead, the surviving spouse must remain in the same home or reapply at a new property if they move.
Deal Math: A 100% P&T Veteran buying a $325,000 home near Davis-Monthan AFB at 6.5% with the full exemption and no funding fee saves $3,088 per year in property taxes plus $6,988 upfront on the funding fee (2.15% of $325,000). The monthly payment drops from approximately $2,365 (P&I $2,055 + insurance $140 + taxes $170) to $2,195 (P&I $2,055 + insurance $140 + taxes $0). Over 30 years, the property tax savings total $92,640, and the total first-year benefit including the fee waiver is $10,076.
The Bottom Line
Arizona’s full property tax exemption for 100% service-connected disabled Veterans eliminates your tax bill entirely, but the annual reapplication and income test add friction that most other states do not require. The income test is generous because it excludes VA disability pay, Social Security, and Military pensions, most qualifying Veterans clear it easily. The partial exemption for lower ratings saves single-digit dollars per year and is not worth the filing effort for most Veterans. File with your county assessor between January 2 and March 1 every year, and plan your home purchase closing around that window. Arizona’s real advantage is its low baseline tax rates combined with VA loan benefits, the exemption is a bonus on top of an already-affordable housing market.
Frequently Asked Questions
Should I apply for the exemption before or after closing on my VA loan?
After closing, you cannot file until you own the home and occupy it as your primary residence. The filing window is January 2 to March 1, so plan your closing date accordingly. If you close after March 1, you wait until the following January to apply.
Will my lender adjust my escrow after the exemption is approved?
Not automatically. Once the exemption is reflected on your tax bill, provide documentation to your mortgage servicer and request an escrow reanalysis. Your monthly payment will decrease and the lender will refund any excess escrow balance.
Does the property tax exemption affect my VA loan qualification?
Yes. Lower property taxes reduce your PITI, which improves your DTI ratio. In Pima County, eliminating $317/month in taxes can shift your DTI by 4 to 5 percentage points, enough to affect AUS decisions on borderline files.
Can I combine the property tax exemption with the VA funding fee waiver?
Yes. The property tax exemption is a state benefit administered by your county assessor. The VA funding fee waiver is a federal benefit. They are completely independent, qualifying for one does not affect the other.
Does IU (Individual Unemployability) qualify for the full exemption?
If the VA rates you at 100% due to IU and your benefits letter reflects a 100% service-connected rating, you should qualify. Confirm with your county assessor that they accept IU as equivalent to a 100% schedular rating.
What happens if my disability rating changes?
If your rating increases to 100%, you can apply for the full exemption during the next filing window. If your rating decreases below 100%, you revert to the partial exemption at your new percentage. Because Arizona requires annual reapplication, the change takes effect at the next filing cycle.
Can I get the exemption on a second home or rental property?
No. The exemption applies only to your primary residence that you own and occupy. Rental properties, second homes, and investment properties do not qualify.
Is the partial exemption for lower ratings worth filing for?
The partial exemption saves roughly $3 to $24 per year depending on your rating and county. At those amounts, the annual filing requirement makes it impractical for most Veterans. The exemption is effectively a 100%-or-nothing benefit in Arizona.
What if I miss the March 1 filing deadline?
You pay full property taxes for the current year. Arizona does not allow late filings or retroactive applications. You must wait until the following January 2 to file for the next tax year.
Does the exemption cover all property tax levies including school district?
Yes. The full exemption for 100% disabled Veterans covers all property tax levies on the primary residence, including county, city, school district, and special district taxes.
How long does it take to get approved after filing?
Processing times vary by county, but most assessors process applications within 2 to 6 weeks after the March 1 deadline. The exemption applies for the full tax year once approved.
Can a surviving spouse transfer the exemption to a new home?
A surviving spouse who moves must file a new application at the new county assessor’s office during the January 2 to March 1 window. The exemption does not automatically transfer, you must qualify independently at the new property.