Arizona House and Senate Republicans have passed HB 2785, a bill designed to bring Arizona income tax law into full conformity with the tax forms issued by Governor Katie Hobbs’ Department of Revenue. The legislation aims to protect taxpayers from uncertainty, forced amended returns, and mid-season rule changes.
The move follows Governor Hobbs’ veto of an earlier tax conformity package that included relief for seniors and changes to deductions. After the veto, the Department of Revenue instructed taxpayers to file under full federal conformity and warned it was too late to change the forms. Lawmakers say HB 2785 ensures Arizona law matches current guidance and prevents disruption during the filing season.
“Arizona taxpayers did exactly what the government told them to do, and the Governor left them exposed. Her Department of Revenue issued tax forms, told people not to delay filing, and testified that changing course would cause massive disruption. Then the Governor vetoed the Legislature’s solution and refused to explain what comes next. That is the opposite of leadership. The House and Senate acted because families, seniors, and small businesses should not be forced to pay penalties, refile returns, or owe unexpected taxes because the executive branch could not get its act together,” according to House Speaker Steve Montenegro.
Testimony from the Department of Revenue indicated that reversing course could force up to one-third of filers to submit paper-only amended returns, pay again to refile, and owe additional taxes months later. HB 2785 aligns statute with instructions already issued by the administration.
Senate President Warren Petersen said, “Families, seniors, and small businesses deserve certainty and accountability from their government. The Governor’s veto of the last bill, mixed signals, and her lack of leadership have created confusion this tax season. Senate and House Republicans are being the adults in the room. We are delivering $1.1 billion in tax relief and ensuring taxpayers do not have to amend returns or pay more because of executive branch chaos.”
The bill conforms Arizona law to federal income tax provisions reflected in Department of Revenue forms for tax year 2025 but does not include an expanded State and Local Tax deduction. House Ways and Means Committee Chairman Justin Olson said, “This bill makes Arizona’s tax forms legal. It applies the Trump tax cuts to the Arizona income tax code. If the Governor fails to sign this bill, a million Arizonans will be forced to amend their returns and pay more to the state. That is unacceptable and irresponsible.”
Senate Finance Committee Chairman J.D. Mesnard added that while this approach was not preferred by Republicans, legislative action was necessary: “Without legislative action, taxpayers could be forced to refile or submit paper amended returns months from now. Some could even be required to pay more because of shifting guidance from the Governor’s administration.”
HB 2785 is described as a targeted fix for this filing season only; future changes remain possible for subsequent years. With passage by both chambers, responsibility now rests with Governor Hobbs regarding whether she will sign HB 2785 into law.
