2025 Tax Elimination Set To Save AZ Renters Money

2025 Tax Elimination Set To Save AZ Renters Money

By Matthew Holloway |

Arizona renters and landlords alike will get to breathe a sigh of relief this month when the Transaction Privilege Tax (TPT), applied by cities to rental payments every single month, is eliminated. While the cities that will no longer enjoy this source of tax revenue and lobbying groups like the League of Arizona Cities and Towns cry foul, local Republicans who pushed for the reform and the renters who pay it are celebrating.

Seventy-five cities across the state charge TPT on rentals ranging from 1.5% to 4%. Depending on rental rates, this could mean monthly savings of about $20-$50 per month based on estimates.

In a statement posted to X in November, Arizona Senate President Warren Petersen touted the tax elimination writing, “Its happening. Renters are about to get relief from the rental tax repeal passed by the Republican led legislature. The rental tax repeal was an important part of our majority plan to deliver inflation relief. To get the governors signature we had to delay the effective date to Jan 1 2025. Many people said the Dems would take the majority and put the tax back in place. Fortunately for renters we held the Senate and the House. Here is an email from a property manager letting the tenants know their rent will be going down.”

Jake Beeson of Beehive Property Management told AZFamily, “It’s going to mean quite a bit for some tenants. We work with the Community Housing Partnership as one of our clients, which has low-income housing, and those rents are between $900 and 1,000 a month. So for a low-income family to have a 2% discount every month doesn’t sound like a lot, but if you’re paying $900 in rent every month, that’s $18. $18 is a whole month of discounted lunches at your kid’s school.”

The outlet noted that the rates in the valley can range from 2% in Mesa to 2.3% in Phoenix or 3% in Cave Creek. Some cities charge as much as 4%.

But not everyone sees the rental tax relief as a positive. Lee Grafstrom, a tax policy expert with the League of Arizona Cities and Towns told Fox10, “You’re not cutting any of the services that citizens are requesting and requiring, so, we still have to do all the same amount of work. We just have this much less money to do it.”

He stressed that cities could find themselves in budget shortfalls, expecting a combined loss of $230 million in tax revenue annually.

“We have to find a way to either cut services or make up that shortfall,” Grafstrom told Fox10. “This is a minor piece of a solution to a much larger problem, in terms of housing affordability.”

The League said in a statement, “Cities and towns across the state are facing a loss of over $230 million in their budgets, which support essential services like police, fire, parks, and more. Without state funding to make up for these losses, local governments will be forced to make tough decisions to balance their budgets, such as cutting jobs and services or raising local taxes—both unpopular choices. Local leaders are working to address these challenges before the repeal takes effect in January.”

The additional savings could see renters parlay the funds into more goods and services to offset inflation, which still tolls heavily on Arizona residents.

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.

Rental Tax Relief Law Set To Take Effect On January 1

Rental Tax Relief Law Set To Take Effect On January 1

By Daniel Stefanski |

Arizona Republican efforts to lower monthly bills for renters around the state have come to fruition.

Late last month, Arizona Senate President Warren Petersen shared a screenshot from an apartment property manager, alerting residents that rental taxes would no longer be on their bills. The manager wrote, “For years, Arizona has been one of the few states to allow cities and government entities to charge tax on rent. In 2023, a law was passed banning such transaction privilege tax. While the law was passed in 2023, it was not set to go into effect until January 1, 2025. Therefore, starting in January, rental tax will no longer be charged, and you will see a decrease in your monthly charges.”

Petersen responded to the news, saying, “It’s happening. Renters are about to get relief from the rental tax repeal passed by the Republican led legislature. The rental tax repeal was an important part of our majority plan to deliver inflation relief. To get the governors signature we had to delay the effective date to Jan 1 2025. Many people said the Dems would take the majority and put the tax back in place. Fortunately for renters we held the Senate and the House.”

Senator Shawnna Bolick also weighed in on the announcement from her chamber’s leader, indicating that additional plans to lower costs for Arizonans might be forthcoming from Republicans in the state legislature. She said, “In 2022, when I first sponsored that bill I met a guy from southern Arizona who asked me to do something about the residential rental tax. I spoke with this same gentleman this past week once again and he asked me to look at another tax issue since it is now going away. Stay tuned.”

Representative Travis Grantham echoed Petersen’s comments, writing, “So happy we made this happen. Wouldn’t have happened without you endlessly pushing for it!”

In August 2023, Governor Katie Hobbs signed SB 1131, the rental tax elimination bill for Arizona tenants, into law.

According to Arizona Senate Republicans at the time of the signing, “There are approximately 70 municipalities within our state charging this tax, while cities and towns continue to collect record revenues. From fiscal years 2019 to 2023, state-shared revenues from both sales and income taxes combined grew $733 million, or 59%. This increase is on top of any sales taxes or property taxes individually levied by each city. Between FY 2024 and FY 2025, those shared revenues are expected to grow by an additional $389 million.”

Hobbs had vetoed an earlier version of the rental tax prohibition. She gave two reasons for her action, stating, “First this bill lacks any enforceable mechanism to ensure relief will be provided to renters. As noted by the legislature’s own attorney, provisions in the bill that purport to require that tax savings be passed on to renters face challenges under both the state and federal constitutions. If we are going to promise relief to renters, it’s important that we are able to ensure they actually receive it.”

The League of Arizona Cities & Towns – as well as several cities and towns across the state – opposed the updated bill as it progressed through the state legislature and through the Governor’s Office in 2023. The Senate passed the bill on March 2, then the House on May 15. The Senate then concurred with the amended proposal on June 13. SB 1131 was not transmitted to Governor Hobbs until July 31 – the same day that the Legislature approved the negotiated Prop 400 plan.

Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.

Sen. Bolick Sounds Alarm On Cost Of Inflation For Arizona Families

Sen. Bolick Sounds Alarm On Cost Of Inflation For Arizona Families

By Daniel Stefanski |

Last week, Arizona State Senator Shawnna Bolick issued a statement about economic calamities affecting families around her state.

Bolick said, “Since Kamala Harris and Joe Biden entered office, Arizona families have felt the weight of crippling inflation caused by their bad policies. In 2022, inflation hit its highest level in 40 years at 9%, and the price of every basic necessity skyrocketed. While the Federal Reserve reports inflation has since eased to near the target 2% threshold, and despite this month’s interest rate cut of 0.5%, conditions are not improving for hardworking Arizonans. Grocery store prices are 25% higher now than just before the pandemic. Homes are no longer affordable for our working class. Eviction filings have hit record highs in the Valley.”

Bolick added, “Republicans at the Legislature have made it our mission to lessen these burdens. We eliminated the tax renters pay on housing. We passed a ban on grocery taxes that sadly every Democrat voted against and the Governor vetoed. I vow to continue fighting for policies that will allow you to keep more of your money next legislative session.”

Last year, Arizona Governor Katie Hobbs signed SB 1131, which Republicans led through the state legislature. This legislation eliminated the rental tax for Arizona tenants.

According to Arizona Senate Republicans, “There are approximately 70 municipalities within our state charging this tax, while cities and towns continue to collect record revenues. From fiscal years 2019 to 2023, state-shared revenues from both sales and income taxes combined grew $733 million, or 59%. This increase is on top of any sales taxes or property taxes individually levied by each city. Between FY 2024 and FY 2025, those shared revenues are expected to grow by an additional $389 million.”

Senate President Warren Petersen issued the following statement in conjunction with the announcement: “Charging a rental tax is bad tax policy. In fact, Arizona is one of only two states in the nation currently allowing this. While our first attempt at eliminating the tax passed out of the Legislature with solely Republican support and was eventually vetoed by the Governor, we’re grateful our Democrat colleagues came to the table with us and realized the real tangible relief this reform will provide.”

Earlier that session, Hobbs vetoed SB 1063, which would have repealed the food municipal tax across the state.

After the governor’s action against the Republican proposal, Senate Majority Leader Sonny Borrelli said, “This veto is a disgraceful windfall for cities and an absolute gouge for families. We’re not only paying inflated prices to feed our families, but we’re also paying more in taxes as the cost of food rises. Food is not a luxury; it is a necessity. A tax on our groceries is regressive and hurts everyone. Over the next four fiscal years, cities and towns are estimated to receive an average of $2.3 billion per year in state-shared revenues, which is an increase of $844 million more than the average for the last four fiscal years. And yet the governor vetoed this bill, only padding cities’ bloated budgets instead of leaving more money in the wallets of hardworking taxpayers.”

Senator Bolick faces a tough General Election fight in November for her bid to return to the Arizona Legislature for another two years. Arizona Legislative District 2 is one of the most competitive in the state, with a 3.8% vote spread in the past nine statewide elections. It is very winnable for Republicans, however, as the party has emerged victorious in six out of those nine elections.

Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.

2025 Tax Elimination Set To Save AZ Renters Money

Housing Costs Continue To Hammer Arizona Workers

By Daniel Stefanski |

Arizona’s housing costs continue to climb at a concerning rate for minimum-wage workers.

The National Low Income Housing Coalition recently released its annual report, showing how much renters need to earn to afford a modest apartment in each state across the United States. Arizona checked in with the 12th highest housing wage among all 50 states and the District of Columbia and Puerto Rico.

According to the report, Arizonans need to bring home $29.93 an hour to afford a two-bedroom rental home. Individuals would need to work 86 hours each week at the state’s $13.85 minimum wage to hold onto that two-bedroom apartment – or 71 hours for a one-bedroom rental.

In comparison, Arizona’s neighbor to the west, California, has the highest housing wage in the country. California renters must make $42.25 an hour to afford a two-bedroom rental home, and the state’s minimum wage workers ($15.50/hour) would need to toil for 109 hours each week to maintain their living arrangements.

Arkansas took the trophy for the State with the lowest housing wage around the union with a $16.27 per hour rate required to afford a two-bedroom rental home and only 59 hours of employment per week at minimum wage ($11.00/hour).

Arizona has 2,683,557 total households according to the report, and 917,899 of those households classified as renters (34% of households in the state). The percentage of renters in California is 45% of total households, while that number is 34% in Arkansas.

The report shows that the fair market rent for a 1-bedroom apartment in Arizona is $1,287 and $1,556 for a 2-bedroom apartment. The median renter household income ($52,391) would support a monthly payment of $1,310 for an apartment.

Addressing the increasing housing costs for the state was a priority for Arizona legislators, though those efforts produced few results. Republican lawmakers were able to strike a deal with Democrat Governor Katie Hobbs during the final stretch of the extended session to prohibit the rental tax for Arizona tenants. Arizona Senate Republicans claimed that “approximately 70 municipalities within our state charge this tax,” and that “this tax can cost as much as $200 per month.”

Senate Majority Whip Sine Kerr applauded the signing of this bill, explaining how important the removal of rental taxes across the state would be for countless Arizonans. She stated, “Rental prices aren’t going down anytime soon, and Arizona tenants are agonizing over just how much more expensive it is now to rent an apartment or house than ever before. For Metro Phoenix, June of this year saw the second-highest monthly total of evictions since the 2008 Great Recession. According to Maricopa County records, landlords filed to evict nearly 7000 times last month. We needed to act promptly. This bill will provide some help, and I’m proud the Majority Caucus spearheaded this change in tax policy.”

Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.

2025 Tax Elimination Set To Save AZ Renters Money

Hobbs Vetoes Popular Rental Tax Bill

By Daniel Stefanski |

After vetoing a collection of budget bills last week, Democrat Katie Hobbs was ready to jettison another Republican-led policy as a divided state government remains far apart on solutions to help Arizonans weather the storms of a harsh economy.

Earlier this month, Republicans in the Arizona House and Senate passed legislation that would prohibit “municipalities from levying municipal tax on the business of renting or leasing real property for residential purposes,” sending SB 1184 to Governor Hobbs’ office on the Ninth Floor of the Executive Tower for consideration.

Governor Hobbs vetoed SB 1184, but her veto explanation struck a different tone than the one delivered to legislators after her rejection of their budget. The governor gave the following explanation for her veto: “I appreciate the legislature’s interest in addressing rising housing costs, particularly for renters. Lowering costs for Arizona families is a priority of my administration. Unfortunately, this bill suffers from two important defects at this time. First, this bill lacks any enforceable mechanism to ensure relief will be provided to renters. As noted by the legislature’s own attorney, provisions in the bill that purport to require that tax savings be passed on to renters face challenges under both the state and federal constitutions. If we are going to promise relief to renters, it’s important that we are able to ensure they actually receive it.

Hobbs then addressed the opposition to the legislative proposal from multiple cities and towns, including quotes from John Lewis (the President and CEO of PHX East Valley Partnership Board) and Yuma Mayor Douglas Nicholls (the League of Cities and Towns President), who had both urged the governor to veto SB 1184.

Republicans in the Legislature were not happy with Hobbs’ action to stop their bill from becoming law. Senate bill sponsor, Steve Kaiser, responded to the governor’s veto, saying, “Rent is the costliest expense for hundreds of Arizonans, but Governor Hobbs is clearly not among their ranks. If she was, she would know that in 70 cities across our state, renters see and pay for a rental tax line item on each monthly bill. Senate Republicans offered a substantive plan to fight spiking inflation that Hobbs vetoed. Governor Hobbs inflation plan? A limited tax exemption for diapers and feminine hygiene products. By her own logic used to veto SB 1184, her proposal would be a tax break for grocery stores, not consumers. Grocery stores, just like landlords, collect and remit tax paid for by consumers. Unlike Hobbs, our citizens don’t have the luxury of falling back on the semantics of tax collection, they feel the hurt of onerous taxation in their wallets.”

House Majority Leader Leo Biasiucci tweeted, “Removing the Home/Apartment rental tax would save Arizona renters $100-$200 per year. Yet, Governor Hobbs vetoed the rental tax repeal bill today. This idea that she’s a Governor for the people is now officially a lie! Watch, she’ll veto the grocery food tax repeal bill next!”

Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.