If enacted, this bill would amend current statutes by adding new provisions related to the determination of state revenue metrics and the reduction of individual income tax rates. Specifically, it would require the Joint Legislative Budget Committee (JLBC) to assess the growth limit, excess state tax collections, structural surplus, and Arizona taxpayer return starting in fiscal year 2025-2026. The bill defines key terms such as "Arizona taxpayer return," which is set at 50 percent of the structural surplus for the following fiscal year, and "structural surplus," which is the difference between ongoing state revenues and expenditures after adjustments.

Additionally, the bill mandates that for each taxable year beginning January 1, 2026, the Arizona Department of Revenue must reduce the individual income tax rate by an amount equal to the Arizona taxpayer return. This change would effectively lower the tax rate based on the state's financial performance, thereby directly linking tax rates to the fiscal health of the state. The bill also introduces definitions for "growth limit," "inflation," and "population growth," which are essential for calculating the aforementioned metrics.

Statutes affected:
Introduced Version: 41-1275, 43-1015, 2025-2026, 2024-2025
Senate Engrossed Version: 41-1275, 43-1015, 2025-2026, 2024-2025