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ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
personal property exemption; increase
Purpose
Effective January 1, 2025, increases the business personal property tax exemption to $500,000.
Background
Personal property is classified and valued by each county assessor, except for centrally assessed personal property, which is valued by the Arizona Department of Revenue (ADOR). After the county assessor values locally assessed personal property, it is placed on the personal property tax roll. Locally assessed personal property, except manufactured housing or mobile homes, is assessed based on the property's full cash value (A.R.S. §§ 42-13304; 42-15053; and 42-19002).
The Arizona Constitution grants the Legislature the authority to determine by law the qualifications for, and the amount of, a property tax exemption for personal property used in trade or business or for agricultural purposes. Current statute exempts up to $207,366 of specified personal property used in trade or business or for agricultural purposes from property tax. The exemption is commonly referred to as the business personal property tax exemption. ADOR annually adjusts the exemption amount for the following tax year to account for inflation. For TY 2023, the exemption is $225,572. The amount of personal property that exceeds the exemption amount is subject to an assessment ratio of 15 percent (Ariz. Const. art. 9, § 2; A.R.S. §§ 42-11127 and 42-15002).
Each person that owns or has control of taxable personal property must deliver a correct report of property to the county assessor by April 1. The self-report is used to identify taxable personal property. Certain personal property used in trade or business or for agricultural purposes is exempt from the requirement to provide a property report (A.R.S. § 42-15053).
If increasing the business personal property tax exemption results in a tax shift that affects the obligations of the state, there may be a fiscal impact to the state General Fund.
Provisions
1. Increases the business personal property tax exemption to $500,000.
2. Becomes effective on January 1, 2025.
Prepared by Senate Research
January 31, 2024
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