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ARIZONA STATE SENATE

Fifty-Third Legislature, Second Regular Session

 

FACT SHEET FOR H.C.R. 2029

 

personal property tax exemption

 

Purpose

 

Subject to voter approval, constitutionally exempts from property tax a certain amount of personal property that is acquired for agricultural, trade or business purposes, beginning in 2019.

 

Background

 

Personal property is defined to include property of every kind, both tangible and intangible, not included in the term real estate. Machinery, equipment and store fixtures are all examples of personal property (A.R.S. § 42-11001)

 

Under the Arizona Constitution (Constitution), all non-exempt property in the state is subject to taxation. Exemptions include: 1) all government property; 2) property of educational, charitable and religious institutions not used for profit; 3) public debts; and 4) household goods used solely for noncommercial purposes. In addition, the Constitution permits the Legislature to exempt up to $50,000 of personal property used for agriculture, trade or business (Ariz. Const. art. 9, § 2).

 

Pursuant to the Constitution, the Legislature has codified an exemption for personal property used for agriculture, trade or business, which is adjusted for inflation and is currently valued at $167,130 in Tax Year 2018 (A.R.S. § 42-11127).

 

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

 

Provisions

 

1.      Exempts, from property tax, the first $2 million of Full Cash Value of personal property that is:

a)      initially acquired during and after 2019; and

b)      used for agricultural, trade or business purposes.

 

2.      Allows the Legislature to adjust the exemption based on a national inflation index.

 

3.      Designates the measure as the Small Business Job Creation Act.

 

4.      Makes technical and conforming changes.

 

5.      Requires the Secretary of State to submit the proposition to the voters at the next general election.

 

6.      Becomes effective if approved by the voters and on proclamation of the Governor.

 

House Action

 

WM                 2/06/18      DP     6-3-0-0

3rd Read          2/21/18                35-25-0

 

Prepared by Senate Research

March 12, 2018

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