Summary of 2025 Arizona Tax Legislation
Summary of 2025 Arizona Tax Legislation
Important Information About This Summary
This document briefly summarizes recent substantive changes to Arizona's tax laws. The bills addressed herein were approved by Arizona's Legislature and signed by Governor Hobbs. Except as noted below, most of these bills will be effective on the general effective date for the legislative session, September 26, 2025.
To limit the size of this document, the descriptions of these bills are brief and not intended to be comprehensive. If you believe that one or more of the following bills may impact the amount of tax that you, your clients, or the company that you work for, you should carefully review the bill and/or contact a state and local tax professional for assistance.
Table of Contents
A. Income Tax Legislation ....................................................................................................2
B. Transaction Privilege ("Sales") and Use Tax Legislation .................................................3
C. Property Tax Legislation ..................................................................................................5
D. Other Tax and Tax-Related Legislation ...........................................................................6
A. Income Tax Legislation
SB 1274: Tax Corrections Act of 2025. Laws 2025, Chapter 182.
Makes numerous technical corrections and some substantive changes to Arizona's tax laws. Substantive changes to Arizona’s income tax laws include clarifying that interest does not accrue, and will not be paid, on the 2023 individual income tax rebates known as Arizona Families Tax Rebates to Arizona taxpayers who filed a full-year resident tax return for tax year 2021, claimed a dependent tax credit on the return, and satisfied other criteria. This change was retroactive to October 30, 2023. (Also affects Arizona sales tax laws as described below.)
SB 1496: Tax Credit; Qualifying Charitable Organizations. Laws 2025, Chapter 257.
Alters and adds some definitions used to determine whether organizations are qualifying charitable organizations for purposes of Arizona’s individual income tax credit for contributions to qualifying charitable organizations.
SB 1749: 2025-2026; Taxation; Omnibus. Laws 2025, Chapter 247.
Extends the deadline for contributions by individuals to public schools for capital items, school meal programs, consumable health care supplies, playground equipment, and shade structures for playground equipment to June 30, 2029. This provision is retroactive to June 29, 2024. Increases the subtraction from Arizona gross income for adoption expenses from $3,000 to $5,000 for individuals and heads of households and to $10,000 for married couples filing joint returns, effective January 1, 2026. (Also affects Arizona sales and property taxes as described below.)
HB 2688: Internal Revenue Code; Conformity. Laws 2025, Chapter 1.
Provides for retroactive conformity to provisions of the Internal Revenue Code (“IRC”) in effect on January 1, 2025 for tax years beginning January 1, 2025. The Arizona Department of Revenue determined that this bill will not have a fiscal impact because no federal acts modified the IRC in 2024.
HB 2704: Tax; Distribution; County Stadium District. Laws 2025, Chapter 251.
Directs income taxes collected from professional baseball players to help reconstruct, equip, repair, maintain and improve Chase Field, the home of the Arizona Diamondbacks. (Also affects Arizona sales tax laws as described below.)
B. Transaction Privilege ("Sales") and Use Tax Legislation
Important Information About This Section
Most of the changes summarized below are applicable to Arizona's sales and use tax laws, and to the county excise taxes that "piggyback" Arizona's sales taxes. Unless otherwise specified below, Arizona municipalities have not adopted these changes. However, Arizona municipalities often adopt changes to their municipal tax codes that parallel changes to the state's sales and use tax laws.
SB 1144: Jail Facilities Excise Tax; Extension. Laws 2025, Chapter 155.
Permits Maricopa County to continue levying a jail facilities excise tax, which applies whenever the state’s sales taxes apply, for up to 20 additional years, if approved by voters. The county’s existing 0.2% jail facilities excise tax is scheduled to expire in March of 2027.
SB 1274: Tax Corrections Act of 2025. Laws 2025, Chapter 182.
Makes numerous technical corrections and some substantive changes to Arizona's tax laws. This year, I did not notice any substantive changes to Arizona’s sales tax laws in this bill. (Also affects Arizona income tax laws as described above.)
SB 1749: 2025-2026; Taxation; Omnibus. Laws 2025, Chapter 247.
Expands Arizona’s existing sales and use tax exemptions for pipes or valves four inches in diameter or larger used to transport oil, natural gas, artificial gas, water, or coal slurry to include wastewater. (Also affects Arizona income taxes as described above and Arizona property taxes as described below.) Effective October 1, 2025.
HCR 2021: Food; Municipal Tax; Exemption.
If approved by Arizona voters in the November 2026 election, this resolution will require Arizona cities and towns: (1) that imposed a tax on food for home consumption as of January 1, 2025 to get voter approval for any tax rate increases, which may not exceed 2% in aggregate, and (2) that did not impose a tax on food for home consumption as of January 1, 2025 to get voter approval before imposing such taxes or subsequently increasing the rate of such taxes, which may not exceed 2% in aggregate. Retroactive to January 1, 2025, if approved by voters.
HB 2119: Model City Tax Code; Notice. Laws 2025, Chapter 144.
Requires municipalities: (1) that want to adopt or repeal an option in the Model City Tax Code (MCTC) to notify all affected taxpayers by mail at least 60 days before voting on the proposed ordinance, and (2) to notify applicants for business licenses of any options in the MCTC that will apply to them.
HB 2639: TPT; Exemption; Qualifying Equipment; Extension. Laws 2025, Chapter 135.
Extends the deadline for Arizona’s existing sales and use tax exemptions for purchases by qualified businesses of qualifying equipment used to harvest or process qualifying forest products removed from qualifying projects from December 31, 2026 to December 31, 2028. Effective October 1, 2025 (per Laws 2025, Chapter 247, Section 7).
HB 2704: Tax; Distribution; County Stadium District. Laws 2025, Chapter 251.
Directs sales taxes collected from retailers, amusement activities (such as baseball games), restaurants, and construction activities at or near Chase Field to reconstruct, equip, repair, maintain, and improve Chase Field, the home of the Arizona Diamondbacks. (Also affects Arizona income tax laws as described above.)
C. Property Tax Legislation
SB 1070: Tax Deed Land Sales; Procedures. Laws 2025, Chapter 15.
Alters the statute that governs sales of real property held by the state due to a tax deed.
SB 1122: Property Tax Exemptions; Inflation Adjustment. Laws 2025, Chapter 16.
Changes the inflation indexes used to calculate annual changes to the maximum allowable exemption, the total assessment limit, and the total income limit for property owned by widows and widowers, persons with total and permanent disabilities, and veterans with service or nonservice connected disabilities.
SB 1224: Property Tax; Limited Property Value. Laws 2025, Chapter 96.
Added two more circumstances under which limited property values must be established at a level or percentage of full cash value that is comparable to that of other properties of the same or a similar use or classification, including properties that previously qualified for, but longer qualify for: (1) property valuation protection for residences of low-income persons 65 years of age and older, and (2) statutory valuation formulas.
SB 1700: County Board of Equalization; Decisions. Laws 2025, Chapter 76.
Prohibits County Boards of Equalization from finding that property values exceeded the assessor's noticed value or recommended classification.
SB 1749: 2025-2026; Taxation; Omnibus. Laws 2025, Chapter 247.
Expands the cap for Arizona’s exemption for business personal property to $500,000 effective January 1, 2026, and provides that the cap shall increase annually with inflation. Updates real property exemption amounts for veterans with service and nonservice-connected disabilities, widows and widowers, and persons with total and permanent disabilities. (Also affects Arizona income and sales taxes as described above.)
D. Other Tax & Tax-Related Legislation
SCR 1004: Prohibit Tax; Monitoring; Vehicle Mileage.
If approved by Arizona voters in the November 2026 election, this resolution will amend Arizona’s constitution to prohibit state and local lawmakers from: (1) imposing a tax or fee on any person based on vehicle miles traveled by the person, and (2) enacting laws or rules to monitor or limit vehicle miles traveled by any person without that person’s consent.
HB 2009: Vehicle License Tax; Exemption; Military. Laws 2025, Chapter 78.
Extends the state’s exemption from the vehicle license tax for members of the United States armed forces, including members of a national guard or reserve unit, who are deployed to persons within thirty days of such deployments and provides that such persons who paid the tax may apply for a refund. The refund provision is retroactive to March 27,2025.
HB 2749: Unclaimed Property; Virtual Currency; Security. Laws 2025, Chapter 150.
Updates Arizona’s unclaimed property laws to account for digital assets, including virtual currencies, cryptocurrencies, and other digital-only assets. Provides that digital assets are presumed abandoned after three years, and that holders of abandoned digital assets must convey them to the Arizona Department of Revenue or the Department’s designated qualified custodian in their native form within thirty days after reporting them abandoned.
