This bill proposes to amend current Arizona statutes regarding the taxation of income by expanding the individual income tax subtraction for active service compensation. Under the current law, compensation received for active service is limited to members of the reserves and the National Guard, specifically referencing the "armed forces." The bill would update this language to include compensation for active service in the "uniformed services" of the United States, which encompasses not only the armed forces but also the Public Health Service and the National Oceanic and Atmospheric Administration.

Additionally, the bill specifies that these changes would take effect for taxable years beginning after December 31, 2025. This means that any compensation received for active service in the uniformed services would be subtracted from Arizona gross income when calculating Arizona adjusted gross income, thereby potentially reducing the tax burden for eligible service members starting in 2026.

Statutes affected:
Introduced Version: 43-1022
Senate Engrossed Version: 43-1022