Taxpayers Won’t Have To Do Anything In Response To Prop 208

March 15, 2022

By Terri Jo Neff |

The Arizona Department of Revenue announced Tuesday it is working with its tax software vendor to automatically amend any filed 2021 individual income tax returns impacted by the recent overturning of Proposition 208.

The 3.5 percent surcharge on individual income over $250,000 ($500,000 married filing jointly) hit taxpayers starting in 2021, but last week a Maricopa County Superior Court judge struck down Prop 208 as unconstitutional.

Taxpayers who have already filed their Arizona individual income tax returns using current forms and instructions will not need to file an amended return, according to ADOR.  

“The Department will hold these returns and process them correctly once it has modified its tax system to remove the surcharge and amend the tax bracket rates,” the statement reads. “At that time, ADOR will automatically adjust the returns to provide for the correct distribution of monies.”

The court ruling which voided Prop 208 will not, however, actually impact an individual’s overall tax liability. The reason, according to ADOR, is legislation signed into law last year by Gov. Doug Ducey which counteracted the surcharge by reducing the state’s top income tax rate for those subjected to the additional tax.

With the Prop 208 surcharge now dropped to 0 percent, the top income tax rate will return to 4.5 percent, ADOR noted.

“Arizona taxpayers will neither owe more tax nor receive a larger refund due to the voiding of the Prop 208 Surcharge,” the statement reads.

Taxpayers who have not yet filed a 2021 individual income tax return are reminded of Arizona’s April 18 filing deadline. ADOR is working as quickly as possible to revise the 2021 tax forms and adjusting the individual income tax brackets to the now proper rates.

State officials are also working with various tax software companies like TurboTax and H&R Block to ensure changes are made to those programs as well.


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