From the State of Arizona Dept of Revenue website:
The starting point for the Arizona income tax computation for a resident individual is the federal adjusted gross income. This amount is then subject to certain additions and subtractions to arrive at Arizona taxable income. There is no specific treatment of gain realized from the sale of a personal residence in the Arizona statutes. Therefore, to the extent the gain is excluded from federal adjusted gross income, it will likewise be excluded from Arizona gross income and not subject to Arizona income tax. However, to the extent the gain is included in federal adjusted gross income; it will likewise be included in Arizona gross income and subject to Arizona income tax.
