I withdrew funds from my 401k early. I'm aware of the 20% federal tax and 10% penalty. However, I'm not certain if the state of Arizona will also tax me.

[xmasbaby0]

The tax software will follow all of your state's tax laws regarding the retirement income you take out of your account.   The information will flow from your federal return to your state return.   Enter the 1099R on your federal return and let the software take care of the calculations.

To enter your retirement income, Go to  Federal> Wages and Income>Retirement Plans and Social Security>IRA  401 k) Pension Plan Withdrawals to enter your 1099R.

States that may tax retirement income from IRA's, pensions, etc.:

AL, AR, AZ, CA, CO, CT, DE, DC, GA, HI, IA, ID, IN, KS, KY, LA, MA, MD, ME, MI, MN, MO, MT, NC, ND, NE, NJ, NM, NY, OH, OK, OR, RI, SC, UT, VA, VT, WI, WV, 

This is a “general” list.  Some of these states have complicated laws that exclude certain types of retirement income, or provide certain income exclusions and age deductions.  This list does NOT refer to Social Security benefits.