ARIZONA HOUSE OF REPRESENTATIVES

Fifty-seventh Legislature

First Regular Session

House: WM DPA 5-4-0-0

HB 2918: tax rates; reductions

Sponsor: Representative Olson, LD 10

Caucus & COW

Overview

Modifies the formula to calculate the truth in taxation rates for equalization assistance, lowers the tax rate to 4.93% for specified transaction privilege tax (TPT) classifications and the income tax rate to 2.47% for individuals, estates and trusts and small businesses.

History

Each year, on or before February 15, the joint legislative budget committee (JLBC) is required to compute the truth in taxation rates for equalization assistance. The computation is done by following a formula outlined in statute. (A.R.S. § 41-1276)

The tax rate for the following transaction privilege classifications is 5%: 1) transporting; 2) utilities; 3) telecommunications; 4) pipeline; 5) private car line; 6) publication; 7) job printing; 8) prime contracting; 9) amusement; 10) restaurant; 11) personal property rental; and 12) retail (A.R.S. § 42-5010).

The income tax rate for individuals, estates and trusts and small businesses is 2.5%. (A.R.S. §§ 43-1011, 43-1311 and 43-1711)

Provisions

1. Modifies the formula to calculate the truth in taxation rates by reducing the result of the current formula by 1.205% for 2025. (Sec. 1)

2. Reduces the tax rate for specified TPT classifications to 4.93%. (Sec. 2)

3. Reduces the income tax rate for individuals, estates and trusts and small businesses to 2.47% beginning January 1, 2026. (Sec. 3)

4. Makes technical and conforming changes. (Sec. 1, 2, 3)

Amendments

1. Removes the reduction of 1.2015% from the calculation of the truth in taxation rate. (Sec. 1)

2. Sets the tax year 2025 qualifying tax rates. (Sec. 1)

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6. HB 2918

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