If enacted, this bill would amend section 43-1022 of the Arizona Revised Statutes to expand the current individual income tax subtraction for net long-term capital gains. Under current law, only gains from assets acquired after December 31, 2011, are eligible for a 25 percent subtraction starting from taxable years after December 31, 2014. The bill would remove the limitation on the acquisition date, allowing all net long-term capital gains included in federal adjusted gross income to qualify for the 25 percent subtraction, effective for taxable years beginning January 1, 2026.

Additionally, the bill would make technical and conforming changes to the existing statute, including updating the effective date for the 25 percent subtraction from 2014 to 2025. The proposed changes aim to simplify the tax code and provide broader tax relief for individuals realizing long-term capital gains, which is expected to reduce state General Fund revenue by an estimated $40 million to $60 million starting in fiscal year 2027.

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