HOUSE BILL 2792
House Engrossed
property tax; exemption; veterans
State of Arizona
House of Representatives
Fifty-seventh Legislature
Second Regular Session
2026
CHAPTER 2
HOUSE BILL 2792
AN ACT
AMENDING SECTION 42-11111, ARIZONA REVISED STATUTES; RELATING TO PROPERTY TAX EXEMPTIONS.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 42-11111, Arizona Revised Statutes, is amended
to read:
42-11111. Exemption for property; widows and widowers; persons
with a total and permanent disability; veterans
with a disability; definitions
A. The property of widows and widowers, of persons with total and
permanent disabilities and of veterans with service or nonservice
connected disabilities who are residents of this state is exempt from
taxation as provided by article IX, section 2, Constitution of Arizona,
and subject to the conditions and limits prescribed by this section.
B. Pursuant to article IX, section 2, subsection F, Constitution of
Arizona, the exemptions from taxation under this section are allowed as
provided in subsections C, D and E of this section.
C. The
propertyPRIMARY RESIDENCE of a veteran with aservice-connected disability whose disability rating by the United States
department of veterans affairs is one hundred percent is fully exempt from
taxation. The surviving spouse of a veteran whose
propertyPRIMARYRESIDENCE is
eligible forRECEIVING the exemption under this subsectionmay continue to claim the full exemption FOR THE SURVIVING SPOUSE'S
PRIMARY RESIDENCE as long as the surviving spouse
uses the property as thesurviving spouse's primary residence and the surviving spousedoes notremarry. FOR THE PURPOSES OF THIS SUBSECTION, A PRIMARY RESIDENCE THAT IS
OWNED BY A VETERAN WHO IS ELIGIBLE FOR THE EXEMPTION UNDER THIS SUBSECTION
AND THE VETERAN'S SPOUSE SHALL BE TREATED AS IF OWNED SOLELY BY THE
VETERAN.
D. The property of a veteran with a nonservice-connected disability
whose disability rating by the United States department of veterans
affairs is one hundred percent or less or with a service-connected
disability whose disability rating by the United States department of
veterans affairs is less than one hundred percent is exempt in the amount
of $4,188. The limit under this subsection is further limited by
multiplying the total exemption amount by the percentage of the veteran's
disability, as rated by the United States department of veterans affairs.
E. The property of a widow or widower or a person with a total and
permanent disability is exempt in the amount of:
1. $4,188 if the person's total assessment does not exceed the
amount provided in paragraph 2 of this subsection.
2. No exemption if the person's total assessment exceeds $28,459.
F. On or before December
of each year, the department shall 40 increase the following amounts:
1. The total allowable exemption amount under subsection D and
subsection E, paragraph 1 of this section based on the average annual
percentage increase, if any, in the GDP price deflator in the two most
recent complete state fiscal years.
2. Beginning in tax year 2026, the total assessment limit amount
under subsection E, paragraph 2 of this section based on the average
annual percentage increase, if any, in the federal house price index for
the two most recent complete state fiscal years.
3. The total income limit amounts under subsection H, paragraphs 1
and 2 of this section based on the average annual percentage increase, if
any, in the GDP price deflator in the two most recent complete state
fiscal years.
G. For the purpose of determining the amount of the allowable
exemption pursuant to subsection E of this section, the person's total
assessment shall not include the value of any vehicle that is taxed under
title 28, chapter 16, article 3.
H. Pursuant to article IX, section 2, subsection F, Constitution of
Arizona, to qualify for
thisAN exemption UNDER THIS SECTION, the totalincome from all sources of the claimant and the claimant's spouse and the
income from all sources of all of the claimant's children who resided with
the claimant in the claimant's residence in the year immediately preceding
the year for which the claimant applies for the exemption shall not
exceed:
1. $34,901 if none of the claimant's children under eighteen years
of age resided with the claimant in the claimant's residence.
2. $41,870 if one or more of the claimant's children residing with
the claimant in the claimant's residence either:
(a) Were under eighteen years of age.
(b) Had a total and permanent physical or mental disability, as
certified by competent medical authority as provided by law.
I. For the purposes of subsection H of this section, "income from
all sources" means the sum of the following, excluding the items listed in
subsection J of this section:
1. Adjusted gross income as defined by the department.
2. The amount of capital gains excluded from adjusted gross income.
3. Nontaxable strike benefits.
4. Nontaxable interest that is received from the federal government
or any of its instrumentalities.
5. Payments that are received from a retirement program and paid
by:
(a) This state or any of its political subdivisions.
(b) The United States through any of its agencies,
instrumentalities or programs, except as provided in subsection J of this
section.
6. The gross amount of any pension or annuity that is not otherwise
exempted.
J. Notwithstanding subsection I of this section, income from all
sources does not include monies received from:
1. Cash public assistance and relief.
2. Railroad retirement benefits.
3. Payments under the federal social security act (49 Stat. 620).
4. Payments under the unemployment insurance laws of this state.
5. Payments from any veterans pensions.
6. Workers' compensation payments.
7. Loss of time insurance.
8. Gifts from nongovernmental sources, surplus foods or other
relief in kind supplied by a governmental agency.
K. A widow or widower, a person with a total and permanent
disability or a veteran with a disability shall establish eligibility for
exemption under this section by filing an affidavit with the county
assessor under section 42-11152 when initially claiming the exemption.
Each year thereafter, the person or the person's representative shall
annually calculate income from the preceding year to ensure that the
person still qualifies for the exemption and notify the county assessor in
writing of any event that disqualifies the person from further exemption.
Regardless of whether the person or representative notifies the assessor
as required by this subsection, the property is subject to tax as provided
by law from the date of disqualification, including interest, penalties
and proceedings for tax delinquencies. Disqualifying events include:
1. Except as provided in subsection C of this section, the person's
death.
2. The remarriage of a widow or widower.
3. The person's income from all sources exceeding the limits
prescribed by subsection H of this section.
4. The conveyance of title to the property to another owner.
L. Any dollar amount of exemption that is unused in a tax year
against the limited property value of property and improvements owned by
the individual may be applied for the tax year against the value of
personal property subject to special property taxes, including the taxes
collected pursuant to title 5, chapter 3, article 3 and title 28, chapter
16, article 3.
M. THE PROPERTY TAX EXEMPTIONS PROVIDED IN SUBSECTIONS C, D AND E
OF THIS SECTION ARE EXCLUSIVE FROM EACH OTHER, AND an individual is not
entitled to property tax exemptions under more than one category as a
widow or widower, a person with a total and permanent disability or a
veteran with a disability even if the individual is eligible for an
exemption in more than one category.
N. For the purposes of this section:
1. "Competent medical authority" means any of the following:
(a) An individual licensed under title 32, chapter 8, 13, 14, 17,
19.1, 25 or 29 or a comparable law of another state.
(b) A registered nurse practitioner as defined in section 32-1601.
(c) The United States department of veterans affairs, as evidenced
by a disability award letter.
2. "Federal house price index" means the average measure of
movement of single-family house prices in the United States published by
the federal housing finance agency, or its successor, for this state.
3. "GDP price deflator" means the average of the four implicit
price deflators for the gross domestic product reported by the United
States department of commerce or its successor for the four quarters of
the state fiscal year.
4. "Person with a total and permanent disability" means a person
who is unable to engage in any substantial gainful activity, for pay or
profit, by reason of any physical or mental impairment that is expected to
last for a continuous period of at least twelve months or result in death
within twelve months as certified by a competent medical authority.
5. "Veteran" means an individual who has served in, and been
discharged, separated or released under honorable conditions from, active
or inactive service in the uniformed services of the United States,
including:
(a) All regular, reserve and national guard components of the
United States army, navy, air force, marine corps and coast guard.
(b) The commissioned corps of the national oceanic and atmospheric
administration.
(c) The commissioned corps of the United States public health
service.
(d) A nurse in the service of the American red cross or in the army
and navy nurse corps.
(e) Any other civilian service that is authorized by federal law to
be considered active military duty for the purpose of laws administered by
the United States secretary of veterans affairs.
Sec. 2. Applicability
This act applies to tax years beginning from and after December 31,
2025.
Sec. 3. Emergency
This act is an emergency measure that is necessary to preserve the
public peace, health or safety and is operative immediately as provided b
law.
APPROVED BY THE GOVERNOR FEBRUARY 12, 2026.
FILED IN THE OFFICE OF THE SECRETARY OF STATE FEBRUARY 12, 2026.
