by Matthew Holloway | Jan 15, 2026 | Economy, News
By Matthew Holloway |
Republican legislators have sent a $1.1 billion tax relief package to Gov. Katie Hobbs, escalating a high-stakes policy dispute over tax conformity as the state enters filing season.
According to a statement released by House and Senate Republicans, lawmakers rapidly passed House Bill 2153 and Senate Bill 1106, legislation designed to align Arizona’s tax code with federal tax reforms enacted in 2025. Supporters estimate the measures will deliver approximately $1.1 billion in tax relief over the next three years.
The bills now await the governor’s signature.
In a statement posted to X, House Republicans wrote, “With costs still high and tax season underway, Arizona families shouldn’t be left waiting. The Legislature has done its job, now it’s time for the Governor to sign this relief into law.”
Republican leaders said the legislation is intended to provide clarity and certainty for families, small businesses, and tax preparers, particularly as tax season is underway. The package fully conforms Arizona law to recent federal tax changes and codifies provisions such as preventing the taxation of tips and overtime pay.
House and Senate Republicans said the plan is focused on helping working families retain more of their earnings, supporting small businesses and job creators, and ensuring taxpayers receive clear and lawful tax guidance during the filing process.
The legislation’s passage follows criticism from the National Federation of Independent Business (NFIB) over Gov. Hobbs’ separate tax conformity proposal. In a press release earlier this week, NFIB Arizona State Director Chad Heinrich urged lawmakers to reject the governor’s approach and instead advance HB 2153 and SB 1106.
Heinrich argued that Hobbs’ proposal would delay tax certainty by requiring taxpayers to wait until budget negotiations conclude before knowing how Arizona will align with federal tax changes passed in 2025 — potentially leaving taxpayers without clarity until June 2026.
“It’s unclear if the left hand knows what the right hand is doing in the Hobbs administration,” Heinrich said. He criticized the proposal for abandoning 2025 tax forms already posted by the Arizona Department of Revenue and instructing taxpayers to wait until budget negotiations are finalized. “This should be a non-starter,” Heinrich said.
NFIB highlighted HB 2153 and SB 1106 as preferred alternatives, noting that the bills would fully adopt federal tax reforms enacted in 2025, including provisions tied to the One Big Beautiful Bill Act (OBBBA), which the organization said small business owners welcomed for the certainty it provided.
“Small business owners breathed a sigh of relief when the One Big Beautiful Bill Act passed and collectively looked forward to the certainty that it provided,” Heinrich said. “Now, the Governor wants to upend all of that to score partisan political points, breaking precedent with how Arizona has always addressed federal tax changes.”
As previously reported by AZ Free News, legislative supporters say the GOP-backed bills offer broader tax relief than the governor’s more narrowly targeted proposal by fully conforming state law to a wide range of federal tax code changes, including those affecting businesses and itemized deductions.
NFIB noted that Arizona’s small businesses employ approximately 1.2 million people statewide and account for seven out of every ten new jobs created. The organization warned that uncertainty over tax conformity could delay business expansion and hiring.
With the legislation now on the governor’s desk, Republican lawmakers said Arizona families and businesses are waiting to see whether Hobbs will sign the tax relief package or veto another key Republican reform.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by Matthew Holloway | Jan 15, 2026 | Economy, News
By Matthew Holloway |
Arizona State Representative Chris Lopez (R-LD16) introduced legislation aimed at reducing costs for ranchers and, ultimately, consumers at the grocery store.
House Bill 2152, dubbed the “No Tax on Troughs” bill, would eliminate Arizona’s transaction privilege tax on water systems and infrastructure improvements on both public and private grazing lands.
The measure targets essential ranching expenses, including fence lines, fence posts, drinking troughs, water lines, and storage tanks, by exempting them from a tax that Lopez says unnecessarily raises operational costs for livestock producers.
“Families are paying more for beef every time they check out at the grocery store,” Representative Lopez said in a press release announcing the bill’s introduction. “Ranchers are facing higher costs just to keep cattle fenced and hydrated, and Arizona is taxing those costs. That cost gets passed straight to consumers.”
Under current law, improvements to grazing infrastructure on federal grazing land, which become federal property once installed, remain subject to Arizona’s sales tax, with no reimbursement to ranchers after ownership transfers. Lopez’s proposal would end that tax treatment.
“At a time when federal land policies already make ranching harder, Arizona should not be adding another layer of cost,” he added.
The Arizona Farm Bureau has publicly argued that farms and ranches face substantial tax pressures, anticipating a potential $5,125 per year increase if federal agriculture tax provisions lapse. The Bureau added that these strains affect decisions on capital expenses like water systems and fencing.
The proposal comes as ranchers across Arizona continue to face rising operational pressures tied to drought conditions, water access, regulatory requirements, and higher input costs. Agricultural groups have warned that these factors have tightened margins for livestock producers and contributed to higher beef prices nationwide.
Arizona’s transaction privilege tax, which functions as a tax on the privilege of doing business rather than a traditional sales tax, has been the subject of multiple reform efforts in recent years as lawmakers debate exemptions and carve-outs for various industries.
Supporters of HB 2152 argue that reducing tax burdens on ranching infrastructure would help lower costs for producers, support wildlife habitat stewardship on public lands, and provide downstream relief for Arizona families at the grocery store.
Lopez represents Legislative District 16, which includes portions of Pinal and Pima Counties.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by Ethan Faverino | Jan 14, 2026 | Economy, News
By Ethan Faverino |
The Arizona Office of Economic Opportunity released preliminary employment data for November 2025, showing that Arizona’s economy added 21,300 nonfarm jobs year-over-year on a not-seasonally adjusted (NSA) basis, representing a 0.6% increase compared to November 2024.
This growth was driven primarily by the private sector, which added 28,000 jobs over the year, while government employment declined by 6,700 positions.
Arizona’s seasonally adjusted unemployment rate increased to 4.3% in November 2025, up from 4.2% in September and 3.9% one year earlier. Over the same period, the U.S. seasonally adjusted unemployment rate also rose, reaching 4.6%
The state’s seasonally adjusted labor force grew by 27,226 individuals from September to November 2025 and increased by 83,081 individuals (2.2%) year-over-year, reflecting continued population and workforce expansion.
From October to November 2025, Arizona added 17,500 total nonfarm jobs. Key monthly gains occurred in:
- Trade, Transportation, and Utilities: +10,600 jobs
- Government: +2,400 jobs, led by Local Government Education with +2,200 jobs
- Professional and Business Services: +1,600 jobs
- Leisure and Hospitality: +1,500 jobs
- Other Services: +1,400 jobs
- Manufacturing: +1,300 jobs
- Information: +1,000 jobs
Losses were reported in Financial Activities (-1,200 jobs) and Construction (-1,100 jobs), with a minor decline in Private Educational Services (-100 jobs). Health Care and Social Assistance showed no change month over month.
Over the 12 months ending in November 2025, the strongest job gains were made by:
- Health Care and Social Assistance: +14,500 jobs
- Professional and Business Services: +9,000 jobs
- Other Services: +4,800 jobs
- Construction: +2,100 jobs
- Leisure and Hospitality: +1,900 jobs
- Natural Resources and Mining: +1,300 jobs
- Private Educational Services: +1,200 jobs
- Financial Activities: +1,100 jobs
Year-over-year losses occurred in Trade, Transportation, and Utilities (-6,700 jobs), Government (-6,700 jobs), and Manufacturing (-1,300 jobs).
Among Arizona’s major metropolitan statistical areas (MSAs), the Phoenix-Mesa-Chandler MSA recorded the largest year-over-year employment gain, adding 78,100 jobs and bringing total employment to 2,801,000.
The Tucson MSA also saw solid growth, with employment increasing by 14,300 jobs, while the Prescott-Prescott Valley MSA added 2,800 jobs over the year. Smaller gains were reported in the Lake Havasu City-Kingman MSA (1,900 jobs), Flagstaff (1,300 jobs), and Sierra Vista-Douglas (800 jobs). The Yuma MSA experienced the opposite with a year-over-year decline of 1,500 jobs.
Statewide, Arizona’s total nonfarm employment reached 3,302,200 in November 2025 on a not seasonally adjusted basis, up from 3,280,900 one year earlier.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
by Matthew Holloway | Jan 13, 2026 | Economy, News
By Matthew Holloway |
Republican legislative leaders in Arizona introduced a tax conformity plan on last week, aimed at aligning the state’s tax code with recent federal tax reforms. The proposal, outlined in a joint press release from the Arizona State Legislature, estimates roughly $1.1 billion in tax savings for Arizonans over the next three years.
Senate Finance Committee Chairman J.D. Mesnard (R-LD13) and House Ways & Means Committee Chairman Justin Olson (R-LD25) are sponsoring the plan through two bills: SB 1106 and HB 2153.
According to the release, Republican lawmakers say the conformity effort will provide certainty to taxpayers and tax preparers amid the current filing season. They state the proposal would adjust Arizona’s tax code to reflect provisions of the federal tax overhaul known as the “One Big Beautiful Bill.”
The Republican plan would include measures such as increasing the child tax credit and establishing a deduction for childcare expenses. It would also aim to apply the federal tax reforms to Arizona’s individual and business tax structures.
“This is an urgent matter. With tax season underway, tax professionals and families alike need clear guidance now,” Senate President Warren Petersen said. “Until the Legislature acts and the Governor signs this plan into law, there is real confusion about how to handle state tax returns. We’re urging Governor Hobbs to join us in resolving this issue promptly by signing this historic tax cut when it hits her desk.”
House Speaker Steve Montenegro (R-LD29) is quoted in the release, asserting that formal legislative action is needed to resolve confusion created by recent state tax guidance issued by the governor’s office, which he says assumes legislative action has already occurred.
Montenegro explained, “The Governor jumped ahead of the law by issuing state tax guidance this week that assumes legislative action – which hasn’t happened yet – and her recent executive order only deepens confusion. This kind of unilateral overreach undermines the process and leaves families, tax preparers, and businesses stuck in the middle.”
He added, “The Legislature is moving to restore certainty, respect the separation of powers, and make sure Arizonans have clear, lawful guidance.”
The press release states that Republican sponsors contend the plan’s focus is on working families, seniors on fixed incomes, and small businesses, and that it would codify measures such as preventing taxation of tips and overtime pay.
SB 1106 and HB 2153 are set to be debated in the Legislature as the session begins.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by Ethan Faverino | Jan 8, 2026 | Economy, News
By Ethan Faverino |
As Arizona lawmakers prepare to convene for the 2026 legislative session, a leading nonpartisan think tank is warning of a demanding agenda driven by fiscal discipline, persistent housing shortages, and critical water policy decisions.
Katie Ratlief, Executive Director of the Common Sense Institute (CSI), emphasized the need for urgent action from the Legislature and Governor Katie Hobbs to address these issues. In a recent report by The Center Square, Ratlief highlighted that the session will require decisive leadership to tackle spending trends, affordability barriers, and the state’s long-term water security.
Arizona’s budget has expanded significantly over the past decade, rising from approximately $10 billion to nearly $18 billion, with $6 billion of that increase occurring in just the last five years. Ratlief urged policymakers to rein in spending increases and reassess recent commitments to determine whether they remain necessary, warning against expenditures outpacing economic growth.
Housing affordability remains a top concern for CSI Arizona, with the latest quarterly report underscoring ongoing challenges despite some cooling in the market. The average home price stands at $426,164—$53,400 more expensive than pre-pandemic trends—leaving households facing high costs amid elevated mortgage rates.
According to CSI Senior Economist and Research Analyst Zachary Milne, Arizonans now need to work more than 64 hours per month, at the average wage, just to afford a typical home payment, significantly up from the historical average of 45 hours.
Real-time estimates show an instantaneous housing shortfall of 52,846 units in Q2 2025, a 6.9% improvement from the revised 56,812 units in 2024. Arizona faces a cumulative housing deficit of 121,334 units, as of 2024, reflecting years of inadequate construction relative to population growth.
Ratlief believes the housing shortfall is not the result of state policy but of holdups originating within cities, noting that local governments control permitting, building codes, and enforcement—factors that can significantly slow housing development.
CSI revealed that most Arizona counties—including Maricopa, with a projected deficit of 34,737 units—are falling behind demand. Even with recent improvements in permitting, Maricopa County is still building thousands of units short of what is needed annually.
Water policy will also dominate discussions this legislative session, as ongoing negotiations over the Colorado River allocations approach a pivotal February 14, 2026, deadline set by the U.S. Department of the Interior.
This is viewed as likely the final opportunity for the seven basin states to reach a consensus agreement on sharing the river’s water before current operating guidelines expire at the end of the year. With Arizona’s unique constitutional requirement, any agreement reached will require legislative approval, setting the stage for intense debate in the 2026 session. Ratlief indicated that if states finalize a deal, the Legislature will debate and vote on authorizing the Department of Water Resources to sign on, potentially shaping Arizona’s water future for decades.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
by Ethan Faverino | Jan 5, 2026 | Economy, News
By Ethan Faverino |
The Industrial Commission of Arizona announced the state’s minimum wage has increased to $15.15 per hour effective January 1, 2026, up from the current minimum wage of $14.70.
This $0.45 adjustment, mandated under A.R.S. § 23-363(B) and the Fair Wages and Healthy Families Act, reflects the rise in inflation from August 2024 to August 2025. The change highlights Arizona’s commitment to tying wage growth to economic realities, ensuring minimum-wage earners can better keep pace with living costs.
Certain exemptions apply under the Act, including employees of parents or siblings, casual babysitters in an employer’s home, workers for the State of Arizona or the U.S. government, and small businesses grossing less than $500,000 annually if exempt under federal law.
For tipped employees, employers may pay up to $3.00 below the minimum wage, provided they maintain records demonstrating that the employee’s combined wages and tips meet or exceed the minimum wage for all hours worked. This move aligns with a broader national trend where more than half of U.S. states now exceed the federal minimum wage of $7.25 per hour, unchanged since July 24, 2009—the longest period without an update since its inception in 1938.
Over the past decade, 30 states and Washington, D.C., have raised their minimum wages above the federal level. This momentum, driven by labor advocates and shifts in economic policy, recognizes that $7.25 is insufficient for a basic standard of living in most areas.
In 2026 alone, 23 jurisdictions—including 22 states and Washington, D.C.—have implemented or announced increases, reflecting a growing consensus on wage equity.
Arizona’s new rate of $15.15 positions it among 18 states where the minimum wage now tops $15 per hour. Washington, D.C., leads the nation with a minimum wage of $17.95 per hour, followed by Washington State ($17.13), New York ($17), Connecticut ($16.94), California ($16.90), Hawaii ($16), and Rhode Island ($16).
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
