ARIZONA STATE SENATE

Fifty-Seventh Legislature, First Regular Session

FACT SHEET FOR H.B. 2672

property tax; exemption; veterans; disabilities

Purpose

Exempts the property of a veteran with a service-connected disability whose U.S. Department of Veterans Affairs (VA) disability rating is 100 percent, or the veteran's surviving spouse, from the full amount of property tax.

Background

All property in Arizona is subject to taxation with certain exemptions outlined in the Arizona Constitution and prescribed by statute. The property of Arizona residents who are widows, widowers, persons with total and permanent disabilities or veterans with service or nonservice-connected disabilities are exempt from property tax subject to the conditions and limitations prescribed by statute. For TY 2025, the exemption amount is: 1) $4,476, if the person's total property assessment does not exceed $31,347; or 2) no exemption if the person's total property assessment exceeds $31,347. A veteran with a service or nonservice-connected disability is eligible for a portion of the maximum exemption amount that is equal to the percentage of the person's disability, as rated by the VA. To qualify for a property tax exemption, a claimant's total income from all sources is subject to a statutory cap. Certain monies are excluded when calculating a claimant's total income from all sources, including payments from veteran disability pensions. The Arizona Department of Revenue annually adjusts the exemption amount, income cap and property assessment limit for inflation. A widow, widower, person with a total and permanent disability or veteran with a service or non-service connected disability must initially establish eligibility for the property tax exemption by filing an affidavit with the county assessor (A.R.S.
§§ 42-11002 and 42-11111).

The Joint Legislative Budget Committee fiscal note on H.B. 2672 estimates a state General Fund cost of $3 million beginning in FY 2027. The cost would be offset by savings attributable to the automatic school tax rate adjustments under the state's truth-in-taxation provisions, resulting in state General Fund savings of $1.7 million beginning in FY 2027 (JLBC fiscal note).

Provisions

1. Exempts, from the full amount of property tax, the property of a veteran with a
service-connected disability whose VA disability rating is 100 percent.

2. Allows the surviving spouse of a veteran with a service-connected disability whose VA disability rating is 100 percent to continue to claim the full property tax exemption as long as the spouse does not remarry and the property is used as the spouse's primary residence.

3. Exempts the property of a veteran with a service or nonservice-connected disability from the requirement to be valued below the statutory property assessment limit to qualify for the exemption.

4. Excludes payments from any veterans pensions, rather than only veterans disability pensions, from the calculation of income from all sources for the purpose of the exemption income cap.

5. Makes technical and conforming changes.

6. Becomes effective on the general effective date.

House Action

WM 2/19/25 DP 8-0-1-0

3^rd Read 2/26/25 55-2-3

Prepared by Senate Research

March 12, 2025

MG/ci