The proposed bill, if enacted, would update Arizona's tax statutes to align with the U.S. Internal Revenue Code (IRC) as of January 1, 2026, reflecting changes made by Congress in 2025. Specifically, it would amend the definition of the IRC to include provisions effective during 2025 and establish new individual income tax subtractions for qualified tips, overtime compensation, vehicle loan interest, and deductions for seniors. The bill also modifies the standard deduction by linking it to the federal standard deduction and allows taxpayers to increase their deduction by the total amount of charitable contributions, subject to specified caps.

Additionally, the bill would make technical and conforming changes to existing statutes, including the removal of outdated provisions and the introduction of new language to clarify the application of tax laws. The changes would be retroactive to January 1, 2025, ensuring that taxpayers benefit from the updated provisions for the 2025 tax year. Overall, the bill aims to enhance tax conformity with federal standards while providing specific benefits to Arizona taxpayers.

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