Arizona’s legislative leaders have announced plans to advance full income tax conformity legislation for the 2025 tax year. This move aims to align state law with the Arizona Department of Revenue’s existing tax forms, following Governor Katie Hobbs’ veto of a $1.1 billion tax relief package and her lack of clarity on tax conformity. House Speaker Steve Montenegro said, “Arizona taxpayers are being asked to file on forms that do not clearly match state law, while the Governor offers no answers and no alternative plan.”
Senate President Warren Petersen expressed concern over the Governor’s decision not to collaborate with lawmakers, emphasizing that “the Legislature is stepping in to provide certainty by conforming state law to the tax forms her DOR has already released.” The proposed legislation would provide an estimated $440 million in tax relief for 2025 by aligning state law with federal provisions already reflected in Department of Revenue forms.
House Ways and Means Committee Chairman Justin Olson highlighted the urgency of preventing disruption during the current filing season, noting that “HB 2785 codifies what the Department of Revenue has already instructed taxpayers to file.” Senate Finance Committee Chairman J.D. Mesnard criticized the situation as a result of “the Governor’s disastrous leadership,” stating that it is crucial for the law and guidance from the Department of Revenue to align.
The Arizona State Legislature is taking action to ensure taxpayers have clear rules now, avoiding confusion and potential amendments due to shifting guidance. Broader discussions on tax policy will continue during budget negotiations.
