By Staff Reporter |
The Republican majority at the Arizona House and Senate are advancing legislation to ensure full income tax conformity.
The state remains without conformity since Gov. Katie Hobbs rejected a solution by the Republican-led legislature amounting to $1.1 billion. Republicans are trying to bring another solution to the table with HB 2785. It’s unclear if Hobbs will pull up a seat for it.
Earlier this month, Hobbs vetoed legislation that would have aligned Arizona tax code with many of the congressional changes passed last summer under the One Big Beautiful Bill Act.
The governor accused Republicans of giving tax breaks to special interests and increasing taxes on working senior citizens. Hobbs said she would only agree to the Democratic minority’s Middle Class Tax Cuts Package.
“I urge you to rethink your partisan political theater and send the Middle Class Tax Cuts Package to my desk,” said Hobbs. “We should not hold tax cuts for over 88 percent of Arizonans hostage in order to force through tax breaks for special interests. Other questions of tax conformity must be decided through budget negotiations, following the precedent set by Governor Ducey.”
Unfortunately for the governor, the Arizona Department of Revenue (ADOR) had already advised Arizonans on how to file under federal tax law changes.
Several days before the governor issued her veto, ADOR notified lawmakers of the impossibility of altering their forms during the filing season. This latest bill from Republicans would codify ADOR’s instructions to taxpayers. Senate Finance Committee Chairman J.D. Mesnard (R-LD13) said the bill wasn’t the preferred approach since it wouldn’t provide as much relief to working families.
“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,” said Mesnard. “Doing nothing would only guarantee more confusion and force families and businesses to fix the 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.”
Without conformity, Arizonans have no way of knowing the accuracy of their filings. It’s likely taxpayers will need to refile, and even possibly pay more than they are prepared to pay.
House Speaker Steve Montenegro (R-LD29) said Hobbs was to blame for the present burden of impossible compliance facing Arizona taxpayers. The speaker said the governor has refused to communicate further with Republican leadership on conformity.
“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,” said Montenegro. “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 (R-LD14) said it was Hobbs’ agency that introduced the deductive provisions for wealthier filers to which she objected.
“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,” said Petersen. “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.”
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