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State Tax Advantage: Military retirement payments and/or survivor benefits up to $2,500.00 per year are exempt. Compensation received for active service as a member of the Armed Forces of the United States for any month during any part of which members served in a combat zone is exempt.
Eligibility: Retiree for retired pay exemption and any Armed Forces Service member serving in a combat zone for combat pay exemption
I found this information at the following web page after googling "Arizona state tax & the military.http://myarmybenefits.us.army.mil/Home/Benefit_Library/State__Territory_Benefits/Arizona.html
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