ARIZONA STATE
SENATE
Fifty-Fourth
Legislature, Second Regular Session
personal property tax;
exemption
Purpose
Subject
to voter approval, constitutionally exempts $2 million of the full cash value
(FCV) of personal property that is acquired for agricultural purposes or in
trade or business from property tax, beginning in 2021.
Background
Personal property includes
property of every kind, both tangible and intangible, not included as real
estate (A.R.S. § 42-11001).
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, among others. The Legislature may exempt up to $50,000 of the FCV of personal property used for agriculture purposes or in trade or business (Ariz. Const. art. 9, § 2).
Pursuant to the Constitution, the Legislature has codified an exemption
for personal property used for agriculture purposes or in trade or business,
which is adjusted for inflation and is currently valued at $185,811 in tax year
2020 (A.R.S. § 42-11127).
If the amount of property tax collected from personal property used for agricultural purposes or in trade or business decreases, there may be a negative fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Exempts, from property tax, the first $2 million of FCV of personal property that is:
a) initially acquired during or after 2021; and
b) used for agricultural purposes or in trade or business.
2. Allows the Legislature to provide by law to adjust the exempt amount based on annual variations in a designated 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.
Prepared by Senate
Research
January 17, 2020
MG/gs