The bill amends Arizona tax statutes to align with the U.S. Internal Revenue Code (IRC) as of January 1, 2023, incorporating changes made by Congress in 2022. It updates the definition of the IRC to include all provisions effective as of that date, while specifically adopting retroactive effective dates and excluding any changes enacted after January 1, 2023. This change is crucial for the computation of Arizona income tax, as it begins with federal taxable income.

Additionally, the bill modifies the definition of the IRC for taxable years beginning after December 31, 2021, to include provisions from significant federal acts such as the Chips and Science Act and the Inflation Reduction Act, which are retroactively effective during that period. The bill also makes technical and conforming changes to ensure consistency with the updated IRC. The estimated fiscal impact on the state General Fund is projected to be a loss of approximately $3.47 million in FY 2023, increasing to $11.62 million by FY 2025.

Statutes affected:
Introduced Version: 42-1001, 43-105
House Engrossed Version: 42-1001, 43-105