Arizona Annuities

Top MYGA Rates Available in Arizona

Rates are subject to change and are not guaranteed until a policy is issued and accepted. Not FDIC-insured. Not a deposit. Guarantees are subject to the claims-paying ability of the issuing insurer. Product availability varies by state.

Tax information is compiled from publicly available state sources and was last reviewed in June 2026. Verify current rules with the state revenue department or a qualified tax professional.

How Arizona taxes annuity income

Arizona applies a flat 2.5% state income tax to annuity distributions that are included in federal adjusted gross income. Qualified annuity distributions (IRA, 401(k) rollovers) are fully taxable as ordinary income; non-qualified annuities are taxed only on the earnings portion under exclusion-ratio rules.

Arizona does not tax Social Security benefits. For retirees combining Social Security with annuity income, only the annuity portion is subject to the 2.5% state tax. Federal income tax and the 10% federal early-withdrawal penalty (before age 59½) apply as usual.

Source: Arizona Department of Revenue

This information is for general educational purposes only and does not constitute tax advice. Tax laws change frequently. Consult a qualified tax professional for advice specific to your situation. Annuity.com does not provide tax, legal, or accounting advice.

Regulatory information is summarized from official state sources cited below and was last reviewed in June 2026. Always verify current requirements with the Arizona Department of Insurance and Financial Institutions (DIFI).

Arizona Annuity Regulations

Free Look Period: 10 days (30 days if age 65+)

Arizona provides annuity purchasers a free look period during which the contract may be returned for a full refund of premiums paid, with no surrender charges:

Standard: 10 days from the date the contract is delivered.
Age 65 and older: the free look extends to 30 days.

Free look periods shown are the statutory minimum; individual carriers may offer longer. Always review your specific contract for the applicable terms.

Source: Arizona Department of Insurance and Financial Institutions (DIFI)

Source: Ariz. Rev. Stat. Title 20 (Insurance)

Best Interest Standard: Adopted — first state to enact the 2020 NAIC revisions

Arizona was the first state to adopt the NAIC's 2020 best-interest revisions to the Suitability in Annuity Transactions Model Regulation (#275), enacted in 2020 at Ariz. Rev. Stat. §20-1243 et seq. A producer recommending an annuity must act in the consumer's best interest — evaluating the consumer's financial situation, insurance needs, and objectives — and may not place the producer's own compensation interest ahead of the consumer's. The standard imposes care, disclosure, conflict-of-interest, and documentation obligations, with insurer supervision systems required.

Source: Ariz. Rev. Stat. §20-1243 et seq. (2020)

Source: Arizona DIFI

Replacement Rules

Arizona requires specific consumer protections when an existing annuity or life insurance policy is replaced:

A written comparison and replacement notice covering the existing and proposed contracts, including surrender charges, benefits, and features.
Notification to the existing insurer so it may provide the consumer relevant policy information.
A best-interest basis for the replacement — it cannot be driven primarily by the producer's compensation.

These rules are designed to prevent churning and ensure consumers are fully informed before surrendering an existing contract. Buyers age 65+ also receive the extended 30-day free look on the new contract.

Source: Arizona DIFI — consumer insurance resources

Regulatory information is summarized for educational purposes and may not reflect the most recent legislative or administrative changes. This content does not constitute legal advice. Consult the Arizona Department of Insurance and Financial Institutions (DIFI) or a qualified insurance professional for the most current requirements.

Frequently Asked Questions

Does Arizona tax annuity income?

Yes. Arizona applies a flat 2.5% state income tax to annuity distributions included in federal adjusted gross income. Qualified annuity distributions are fully taxable; non-qualified annuities are taxed only on earnings. Arizona does not tax Social Security benefits.

What is the free look period for annuities in Arizona?

Arizona provides a 10-day free look period for most annuity contracts, extended to 30 days if the owner is age 65 or older. During this window the contract may be returned for a full refund of premiums paid.

Does Arizona require annuity agents to act in my best interest?

Yes. Arizona was the first state to adopt the NAIC's 2020 best-interest revisions (Ariz. Rev. Stat. §20-1243 et seq.). Producers must act in the consumer's best interest and may not place their compensation interest ahead of the consumer's.

What protections apply when replacing an annuity in Arizona?

Arizona requires a written replacement comparison, notification to your existing insurer, and a best-interest basis for the recommendation. Buyers 65+ get a 30-day free look on the replacement contract.

How do I verify an Arizona annuity agent's license?

Use the Arizona Department of Insurance and Financial Institutions license lookup at difi.az.gov to confirm any agent holds an active Arizona insurance license.