House Speaker Mike Johnson said Wednesday that congressional Republicans must make temporary federal income-tax deductions for qualified tips and overtime permanent, tying their continuation to the outcome of the November midterm elections.
Johnson made the commitment during a press conference at PepsiCo’s Frito-Lay manufacturing facility in Casa Grande, where he joined Treasury Secretary Scott Bessent and Rep. Juan Ciscomani (R-AZ-06) for a factory tour and roundtable discussion with Arizona manufacturers and business leaders.
Responding to a question from AZ Free News about the provisions’ scheduled expiration after 2028, Johnson said Republicans intend to pursue an extension.
“We have to make these tax cuts permanent,” Johnson said during the press conference. “We have to ensure that the great benefit that people are feeling right now continues.”
The Working Families Tax Cuts established deductions for qualified tips and overtime compensation beginning with the 2025 tax year and continuing through 2028. The tips deduction is capped at $25,000 annually, while individuals may deduct up to $12,500 in qualified overtime compensation, or $25,000 for married couples filing jointly. The overtime deduction applies to compensation exceeding a worker’s regular rate of pay, such as the additional half-time portion of time-and-a-half wages, according to the Internal Revenue Service.
Johnson argued that continued Republican control of Congress would be necessary to extend the provisions.
“If the Republicans lose control of the Congress in this election cycle in 2026, you can kiss those tax cuts goodbye,” Johnson said.
He also said no Democratic members of the House or Senate supported the tax package and argued that the November election would determine whether Congress extends its temporary provisions.
The law, enacted as Public Law 119-21, permanently extended several provisions of the 2017 Tax Cuts and Jobs Act while establishing the temporary deductions for tips, overtime, qualifying vehicle-loan interest, and eligible seniors. The Congressional Budget Office (CBO) estimated that the law would increase primary federal deficits by approximately $3.4 trillion between 2025 and 2034 through a $4.5 trillion reduction in revenues, partially offset by $1.1 trillion in lower direct spending. A separate CBO estimate placed the total deficit effect at approximately $4.1 trillion when additional debt-service costs are included.
Arizona adopted corresponding state income-tax deductions for qualified tips and overtime through the budget agreement between Arizona Republicans and Gov. Hobbs in June.
Bessent, Johnson, and Ciscomani toured the Casa Grande facility before meeting with local business owners and managers to discuss manufacturing, taxation, and economic growth. The City of Casa Grande lists more than 300 associates at the Frito-Lay facility, which produces Lay’s, Fritos, Tostitos, Doritos, and Cheetos products.
Bessent said in a post on X that the visit focused on the administration’s “America First pro-growth economic agenda” and the effects of the Working Families Tax Cuts one year after President Donald Trump signed the legislation.
One year after President Trump signed the Working Families Tax Cuts into law, the promise of the American Dream is extending to every factory floor. It was great to join Speaker Johnson and Congressman Ciscomani at the Frito-Lay facility in Casa Grande, Arizona to discuss how the… pic.twitter.com/crTUUOySqx
— Treasury Secretary Scott Bessent (@SecScottBessent) August 6, 2026
The Treasury Department says 97 percent of filers received a tax cut compared with what they would have owed if the 2017 tax provisions had expired. The Treasury reported $325 billion in total refunds, $82 billion claimed through individual tax-relief provisions, and an average refund of approximately $3,300.
During the press conference, AZ Free News asked Ciscomani what specific economic developments in the Sixth Congressional District could help reverse the continuing financial pressure facing Arizona households and the state’s declining workforce participation.
The question cited a recent Common Sense Institute (CSI) analysis, which found that Phoenix-area prices remained 33.4 percent higher than in June 2019. CSI estimated that the higher price level is costing a typical Arizona household an additional $1,673 per month.
Arizona’s unemployment rate also increased to 4.9 percent in June, its highest level since the COVID-19 pandemic, while labor-force participation fell to 60.3 percent. The participation rate was near the state’s 10-year low after declining for five consecutive months.
Ciscomani responded by citing projected increases of between $7,400 and $10,600 in take-home pay for an average Arizona family and approximately $3,500 in lower taxes. He also pointed to accounts from parents on a youth football team he coaches who told him they had received the largest tax refunds of their lives.
“This is real money back in people’s real pockets,” Ciscomani said.
The $7,400-to-$10,600 figure has been promoted by Republican lawmakers as a projected increase in take-home pay. It is separate from the Treasury’s reported national average refund of approximately $3,300. Rep. David Schweikert (R-AZ-01) previously described the estimate as including lower taxes and projected wage growth.
“Our opponents on the Democrat side believe that just either freebies or more government programs are the ones that create that. And creating more government jobs is not. Creating jobs is what this company here is doing by expanding and hiring more people, improving the safety of the company, and also attracting more people to work here. That is what’s actually moving forward.”
Ciscomani said allowing families to retain more of their earnings would increase consumer spending and stimulate private-sector job creation. He cited the host facility’s expansion and hiring as an example of private-sector economic activity.
“From the numbers that we know as statistics and also testimonials that I hear about everywhere I go, we know that families are overall doing better,” Ciscomani said.
He acknowledged that Arizona families continue to face financial difficulties and attributed much of the remaining pressure to inflation experienced during former President Joe Biden’s administration.
“Are there hardships? Are there things that people are struggling with? Absolutely,” Ciscomani said. “And we don’t ignore that.”
Ciscomani said the country was “clawing” its way out of the earlier inflationary period and described the economy as moving in the right direction. “We have more work to do, but we’re definitely on the right track.”
Johnson concluded that maintaining Republican congressional majorities would be central to extending the tips and overtime provisions beyond their current expiration.
“Elections have consequences,” Johnson said. “They really do.”
The Common Sense Institute announced it has promoted Zach Milne to Director of Policy and Research, where he will oversee the organization’s research agenda and continue leading data-driven policy analysis focused on free enterprise and economic issues affecting Arizona.
In his new role, Milne will direct CSI’s research initiatives while continuing to produce analysis intended to inform policymakers and the public on issues related to Arizona’s economy, workforce, fiscal policy, and competitiveness.
Milne joined the Common Sense Institute after serving as an economist in the Arizona Governors Office of Strategic Planning ad Budget.
During his time with the state, he developed Arizona’s revenue forecasts, advised executive leadership on fiscal policy, and analyzed tax and budget legislation.
He earned a bachelors degree in economics and statistics, along with a master’s degree in economics from Arizona State University.
Prior to his career in economics, Milne served more than 20 years in the United States Air Force.
Please join us in congratulating Zach Milne on his promotion to Director of Policy and Research at Common Sense Institute.
As Senior Research Analyst, Zach has played a key role in establishing CSI as a trusted source of independent economic analysis through his work on housing… pic.twitter.com/LEQTq8fUYF
— Common Sense Institute Arizona (@CSInstituteAZ) July 30, 2026
Since joining CSI, Milne has helped expand the organization’s research portfolio, leading several of its signature projects, including the Free Enterprise Report and the Housing Affordability Index.
CSI Executive Director Katie Ratlief praised Milne’s contributions to the organization and expressed confidence in his leadership moving forward.
“Research that makes a difference doesn’t just analyze data. It changes the way people think about important policy issues,” stated Ratlief. “Zach has been instrumental in building both the quality of our research and the reputation CSI has earned as a trusted source of objective economic analysis. His commitment to accuracy and thoughtful approach to every project have helped position CSI as a leading voice on the policy issues that matter most to Arizonans. I look forward to seeing him continue building on that foundation in this new role.”
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
Inflation cooled for the Phoenix metro area last month, and expenditures went up.
The Common Sense Institute (CSI) reported that Phoenix metro’s Consumer Price Index rose 2.8% year-over-year in June, a slight reduction from a 3% reading in April. Energy prices dropped by more than 6% in a single month, attributed to easing tensions with Iran.
CSI noted that Arizona’s growth rate was slower than the rest of the nation. Arizona’s home prices have also cooled while home prices climb nationally.
Over the past seven years, prices have increased in the Phoenix metro area by more than 33%. The typical household pays nearly $1,700 more a month on average for its regular expenditures than they did in the last year before the pandemic hit: around $5,200 to nearly $6,900. CSI estimated that the average Phoenix metro household would have been paying just $600 more compared to 2019 if inflation had followed a steady 2% increase rate these past seven years.
From the national perspective, the Joint Economic Committee (JEC) reported that headline personal consumption expenditure price index inflation rose to nearly 4% from June 2025 to last month. The Federal Reserve’s target for that metric is 2%. Core personal consumption expenditure price index inflation was reported to be nearing 3.3%.
Services inflation rose by 0.13% and goods inflation dropped by 0.63%.
Real personal consumption expenditures increased by $68 billion, or 0.4%. Real personal consumption expenditures on all services increased by $28 billion, or 0.26%, and real personal consumption expenditures on all goods increased by $42 billion, or 0.73%.
The JEC reported that the nominal personal savings rate declined by 0.1% to 2.7%. Headline personal income increased by $55 billion, or 0.2%, and real disposable income per capita increased by nearly 0.3%.
U.S. News & World Report ranked Arizona fourth for economy in its latest Best States annual report for 2026. This marked the highest ranking achieved by the state this past year among all scorecard metrics. The state ranked high for business environment, seventh; growth, seventh; and employment, 17th.
Arizona also ranked 33rd for fiscal stability and 42nd for opportunity: 28th for economic opportunity, 32nd for equality, 35th for affordability, 30th for long-term fiscal stability, and 33rd for short term fiscal stability.
All metric rankings tallied, Arizona came in 34th overall.
Elsewhere, Arizona ranked 21st for healthcare, 23rd for infrastructure, 29th for crime and corrections, 41st for natural environment, and 43rd for education.
The Arizona Commerce Authority issued a new report this month indicating that Arizona is exceeding its goals for the 2026 fiscal year: more than 26,000 potential new jobs added (131% of goal), nearly $110 billion in capital expenditures (2,749% of goal), and more than $81,000 in wages (137% of goal).
Yet, Arizona’s unemployment rate has been outpacing job growth. The state was one of seven states to experience an increase in unemployment, and its rate recently hit a high of 4.9%, numbers not seen since the pandemic. Labor force participation also fell to a total nearing a 10-year low.
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Arizona experienced increases to both unemployment and jobs in the month of June.
The latest monthly update from the Joint Economic Committee (JEC) reflected that Arizona was one of seven states to experience an increase in unemployment and one of 34 states to experience an increase in jobs last month.
Arizona unemployment rose by 0.1% for a total of 4.9%. In other words, employment fell by 22,427 last month and by 91,024 over the past 12 months. That unemployment rate reflects the state’s highest rate since the pandemic.
Labor force participation fell by 0.4% to 60.3% last month, nearing the state’s 10-year low. This decline marked the fifth consecutive month of the downward trend. Over the past 12 months, the state’s labor force participation rate fell by 1.8%. Overall, Arizona ranks 37th in the nation for labor force participation. The state reached its 10-year high in November 2019, at 62.2%, and sank to its 10-year low in April 2020, at 60.2%.
Net payroll jobs grew by 2,400 after a loss of 1,600 net payroll jobs in May. Arizona’s nonfarm payroll employment increased in nine of the past 12 months.
Arizona also ranked 15th in the nation for percentage gain in nonfarm payroll employment over the last 12 months. The state’s private sector added 2,500 net private payroll jobs, reaching a total of 30,300 private payroll jobs over the past 12 months.
An analysis from the Common Sense Institute (CSI) found that Arizona outperformed the nation for job growth in June. CSI found Arizona’s national growth rate to be 0.72%, more than double the national growth rate of 0.32%.
CSI did warn that May’s employment estimates underwent significant revisions, which indicated volatility of monthly labor data. The state initially reported gaining 2,000 jobs for that month. The decline of 1,600 jobs marked one of the largest downward revisions in the nation, per CSI.
JEC reported that Arizona’s best performing sectors for employment from May to June were trade, transportation, utilities, and professional and business services, collectively accounting for the addition of 5,700 jobs. The worst performing sectors were leisure and hospitality and manufacturing, collectively accounting for the loss of 4,200 jobs.
From June 2025 to June 2026, the best performing sectors for employment were private education and health services and professional and business services, collectively accounting for the addition of 30,500 jobs. The worst performing sectors were leisure and hospitality and state and local government, collectively accounting for the loss of 9,900 jobs.
CSI found that Arizona’s mining sector was the fastest-growing industry in the state over the past year. The sector added 1,400 jobs over the past 12 months, a growth of nearly 9%. CSI also found that education and health services also grew at a steady clip of about 3.7%, outpacing national growth.
Nationally, unemployment fell in 30 states, rose in seven states, and remained unchanged in 14 states. The District of Columbia was included in the national analysis and maintained the highest unemployment rate, 6%. South Dakota had the lowest unemployment rate, 2%.
Payroll jobs rose in 34 states and fell in 17 states. Alaska and New Hampshire had the largest payroll job percent increase, and West Virginia had the largest payroll job percent decline.
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A new data analysis.shows that Arizona is facing more of an affordability crisis than other states as the 2026 elections heats up.
Arizona households presently carry above-average debt across auto loans, credit cards, and mortgages. Arizonans are also falling behind on payments at rates well above the national average, according to new analysis by the Common Sense Institute (CSI).
In Arizona, CSI found that auto loan debt is 7% higher, credit card debt is 8% higher, and mortgage debt is 22% higher than the national average.
Arizona also sits at the bottom half of the nation in terms of average credit score, which is 666. The state ranks 30th overall, having fallen seven points in 2025 and experiencing the 10th-fastest drop in average household credit score among all states.
Arizona experienced the second-largest increase in per-capita debt out of 11 reported states. The state has experienced a rise in per-capita debt amounting to nearly 130% since 2003. Only Texas reported a worse increase in per capita debt, at 148%.
That metes out to an average per-capita household debt of $74,000. CSI reported that this average debt in Arizona has largely been driven by mortgage debt.
The same can be said for households elsewhere on that point. Nationally, household debt neared $20 trillion by the end of last year — much of that driven by mortgage debt ($13.2 trillion, an increase of 4.5%), followed by auto loans and student loan balances ($1.7 trillion respectively, reflecting increases of 0.7% and 3%) and credit card debt ($1.3 trillion, an increase of 5.5%).
Arizona didn’t lead by all negative metrics. Arizona’s higher education-related debt was 3% lower than the national average, and student loan debt was 8% lower than the national average.
And according to CSI, less than 23% of Arizona households have liquidity resilience, or ability to handle potential credit problems — far less than the average household nationwide. CSI attributed this to Arizonans possessing higher-than-average debt, higher delinquency, and a lower cash cushion than the average household in the nation.
The latest data from the Consumer Price Index also reflected that Arizona had more sluggish growth than the rest of the nation. Yet, Arizonans have been spending an average of more than $1,000 more per month than they would have if inflation had risen steadily at 2% since December 2020.
The average Phoenix-area household was spending about $6,900 per month as of June 2026, compared to the projected $5,800 under a 2% inflation trajectory.
In December 2020, the average Phoenix-area household was spending about $5,200.
The findings contrast with Gov. Katie Hobbs’ recent messaging on Arizona’s economy.
In April, Hobbs announced that Arizona ranked second in the nation for economic performance and fifth for economic outlook in the American Legislative Exchange Council’s annual Rich States, Poor States report. She also argued that her administration’s policies have lowered costs for working families.
