AZ SB1287

Adds a new subtraction from Arizona gross income for military retirees receiving retired or retainer pay from the uniformed services of the United States, allowing up to $5,000 in annual exclusion.

This military pension subtraction is an alternative to the existing $2,500 subtraction available under paragraph 2(a) of section 43-1022, meaning taxpayers may claim only one or the other.

Applies retroactively to all taxable years beginning on or after December 31, 2012.

Removes "retired or retainer pay of the uniformed services of the United States" from the existing $2,500 pension and annuity exclusion in paragraph 2(a) to avoid duplication with the new $5,000 military-specific exclusion.