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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
business personal property; exemption.
Purpose
Effective January 1, 2032, exempts, from property tax, all locally assessed personal property that is used for agricultural purposes or used in a trade or business.
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. ADOR annually adjusts
the exemption amount for the following tax year to account for inflation. For
TY 2025, the exemption is $269,905. Statute outlines an additional depreciation
schedule for certain subclasses of class 1, class 2 and class 6 personal
property (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).
The Joint Legislative Budget Committee fiscal note estimates that H.B. 2389, beginning in FY 2033, would have a state General Fund cost of $73.8 million, reduced to $14.8 million after being offset by savings attributable to the automatic school tax rate adjustments under the state's truth-in-taxation provisions (JLBC fiscal note).
Provisions
1. Expands the personal property tax exemption to include all locally assessed personal property that is used for agricultural purposes or used in a trade or business.
2. Removes all locally assessed personal property that is used for agricultural purposes or in trade or business from the applicable property tax classifications.
3. Repeals the additional depreciation schedule applicable to certain subclasses of class 1, class 2 and class 6 personal property.
4. Applies, to a person that owns or has control of locally assessed, tax-exempt personal property, the exemption from the requirement to annually provide a property self-report to the county assessor.
5. Makes technical and conforming changes.
6. Becomes effective on January 1, 2032.
House Action
WM 2/12/25 DPA 5-4-0-0
3rd Read 2/25/25 33-27-0
Prepared by Senate Research
March 5, 2025
MG/ci