This bill proposes to amend several sections of the Arizona Revised Statutes to align the state's tax laws with the U.S. Internal Revenue Code (IRC) as of January 1, 2026. Specifically, it updates the definition of the IRC to reflect changes effective during 2025 and establishes new subtractions from Arizona gross income for certain deductions, such as those related to elderly taxpayers, qualified vehicle loan interest, tips, and overtime compensation. The bill also redefines the standard deduction to match the federal basic standard deduction and modifies the allowable charitable deduction for taxpayers using the standard deduction starting in 2026.

In terms of deletions, the bill removes outdated references to previous tax years and inflation adjustments related to the standard deduction. It also eliminates specific dollar amounts for the standard deduction that were previously set, replacing them with a reference to the federal standard deduction. The changes are designed to ensure that Arizona's tax statutes remain consistent with federal tax law while providing specific benefits to taxpayers, particularly those with qualifying deductions. The act is intended to be retroactive to taxable years beginning on January 1, 2025.

Statutes affected:
Introduced Version: 42-1001, 43-105, 43-301, 43-323, 43-1022, 43-1041, 43-1012, 43-1072, 43-1072.01, 43-1072.02, 43-1073, 43-1073.01, 43-1021, 43-1023, 43-309, 15-1628, 15-1451, 43-1333, 43-1025, 43-1027, 43-1029, 111-5, 111-92, 41-1518, 43-1042, 20-1691, 101-336, 43-1024, 43-1028