ARIZONA STATE SENATE
Forty-seventh Legislature, Second Regular Session
FACT SHEET FOR S.B. 1170
estate; generation skipping taxes; repeal
Purpose
Repeals the estate and generation skipping tax.
Background
The Arizona estate tax is a tax on the transfer of property or interest in property that takes effect upon the owner’s death. The estate tax is an amount equal to the federal credit for state death taxes. Estate taxes are collected by the Arizona Department of Revenue (DOR) and are deposited into the state General Fund.
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) included significant changes to the estate and generation-skipping transfer tax. The federal provisions in EGTRRA phased out and eventually repealed the federal state death tax credit beginning in tax year 2002. Laws 2002, Chapter 344 provided conformity with Internal Revenue Code provisions relating to EGTRRA. Arizona’s estate tax is based on the maximum credit allowed by the federal state death credit. As a result, the state death tax credit was gradually phased out by 25 percent per year between 2002 and 2005.
Fiscal impact information has been requested from DOR.
Provisions
1. Repeals the estate and generation skipping tax.
2. Allows the amount of federal estate taxes to be subtracted from an estate’s Arizona gross income.
3. Makes technical and conforming changes.
4. Becomes effective on the general effective date.
Prepared by Senate Research
January 17, 2006
SL/ac