The bill SB1260 proposes to amend the Arizona small business income tax rate, aligning it with the individual income tax rate of 2.5 percent retroactively to taxable years beginning January 1, 2023. Currently, the small business tax rate is set to decrease to 2.8 percent for taxable years 2023 and 2024, before reaching 2.5 percent in 2025. The new legislation accelerates this reduction, allowing small businesses to benefit from the lower rate two years earlier than previously scheduled.

Additionally, the bill includes technical and conforming changes to the existing law and updates the fiscal impact statement. The overall effect of this legislation is to provide immediate tax relief to small businesses by reducing their tax burden sooner than originally planned, which is expected to have a minimal impact on state General Fund revenues in the upcoming fiscal years.

Statutes affected:
Introduced Version: 43-1711
Senate Engrossed Version: 43-1711
Chaptered Version: 43-1711