SSMS 2014 "Deploy Database" feature has old SQL Azure settings
I wouldn't have been able to find the solution to this problem if you hadn't decided to open the VM on azure and check the version numbers, so thank you!

After I saw your post, I googled "sql 12.0.2430.0" and found a hotfix from microsoft that fixed the problem.

You can find the hotfix Here

The update added full support for the new Azure SQL database tiers.

Cheers!