House and Senate Republican leaders in Arizona are moving forward with legislation aimed at aligning state tax law with federal provisions already reflected in Department of Revenue forms. This action comes after months of calls for income tax conformity, which they say is needed to provide certainty for taxpayers as filing season begins.
Republican leaders sought guidance from the Governor following her veto of a $1.1 billion tax relief plan but received no response. On January 14, the Department of Revenue stated that it had already issued tax forms based on full conformity with recent federal changes and warned that making changes during filing season would be nearly impossible. Despite this testimony, Governor Hobbs has not provided direction or responded to legislative inquiries.
As a result, legislative leadership is introducing a measure to conform Arizona law to the existing tax forms. 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. We asked for clarification privately. We asked publicly. We sent a detailed letter. We received silence. With tax season underway, waiting is not an option. This legislation exists because executive inaction left taxpayers exposed, and the Legislature has a responsibility to step in and restore clarity.”
Senate President Warren Petersen added, “Arizona taxpayers shouldn’t have to guess whether the forms they’re using are accurate, and they shouldn’t be forced to refile or pay more in taxes. It’s unfortunate the Governor has chosen not to work with us. The Legislature is stepping in to provide certainty by conforming state law to the tax forms her DOR has already released, including the State and Local Tax Deduction. The Governor would call that provision a tax break for the rich. We do not support the SALT deduction, but her agency has already included it on the forms, leaving the Legislature no choice but to address it. Tax reform was meant to make filing simpler and more predictable, not create confusion, anger, and frustration for Arizona taxpayers.”
The proposed legislation is expected to provide approximately $440 million in tax relief for 2025 by bringing state law into line with federal provisions used by the Department of Revenue. It does not include additional child tax credits or dependent care deductions previously offered in a vetoed package; instead, lawmakers emphasize their focus on preventing disruptions during this year’s filing period.
House Ways and Means Committee Chairman Justin Olson stated: “The filing season is already underway, and the lack of clarity is creating confusion and serious problems. HB 2785 codifies what the Department of Revenue has already instructed taxpayers to file. It would be unacceptable to require taxpayers who relied on the guidance of the Hobbs Administration to file amended returns to pay more of their hard-earned resources to the state. If any policymaker desires to decouple from the income tax changes of H.R.1, those changes should have been agreed upon and adopted months ago—not in the middle of the tax filing season.”
Republicans also emphasized that they will not support any approach for 2025 requiring large numbers of Arizonans to submit amended paper returns due to shifting rules.
Senate Finance Committee Chairman J.D. Mesnard commented: “This is definitely not our preferred approach—we would much rather implement the plan that offers more help to working families—but we have no choice but to fix the mess created by the Governor’s disastrous leadership,” he said.“The Department of Revenue has already told taxpayers how to file, and we are compelled to make sure the law and that guidance align, especially since the Department has publicly advised taxpayers not to wait to file.Doing nothing would only guarantee more confusion and force families and businesses to fix government’s mistakes later.We will never support a plan that requires taxpayers to amend their returns because state leaders failed to act when it mattered.It would be completely unjust.”
Michael Carbone was elected as a Republican representative for Arizona’s 25th House District in 2023.
