The proposed bill, if enacted, would amend several sections of the Arizona Revised Statutes to reduce various tax rates effective for taxable years beginning January 1, 2026. Specifically, it would decrease the individual income tax rate, the estates and trusts income tax rate, and the Arizona small business income tax rate from the current 2.5 percent to 2.47 percent. Additionally, the state transaction privilege tax (TPT) rate would be lowered from 5 percent to 4.93 percent. The qualifying tax rate (QTR) for tax year 2025 would also be adjusted, setting it at $1.54185 for high school districts and $3.0837 for unified school districts.

The bill would also make technical changes to existing statutes, including updates to the language regarding the timing of tax rate increases and the adjustment of income dollar amounts for tax brackets based on the consumer price index. Notably, it would replace the current QTR figures for 2024 with the new rates for 2025 and establish a new tax rate of 2.47% for taxable years beginning after December 31, 2025, while maintaining the existing provisions for tax adjustments through 2022.

Statutes affected:
Introduced Version: 41-1276, 42-5010, 43-1011, 43-1311, 43-1711, 15-971, 42-17151, 15-447, 42-5008.01, 42-5070, 42-5076, 42-5005, 42-5072, 42-5069, 42-5029, 42-5075, 42-5032.02, 43-243, 43-244
House Engrossed Version: 41-1276, 42-5010, 43-1011, 43-1311, 43-1711, 15-971, 42-17151, 15-447, 42-5008.01, 42-5070, 42-5076, 42-5005, 42-5072, 42-5069, 42-5029, 42-5075, 42-5032.02, 43-243, 43-244