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ArizonaHB 4168Fifty-seventh Legislature - Second Regular SessionHouseWALLET

taxation; omnibus; 2026-2027

Sponsored By: Sponsor information unavailable

Signed by Governor

2026-2027aca (see also: arizona commerce authority)applicabilityarizona commerce authority (aca)computer data center tax reliefdepartment of revenue (dor)dor (see also: department of revenue)insurance - title 20internal revenue codeomnibuspinal countypublic infrastructure distributionretroactivitysaving clausestate board of tax appealsstate government - title 41taxationtaxation - title 42taxation of income - title 43unemployment insurance operating fund

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Bill Overview

Analyzed Economic Effects

12 provisions identified: 5 benefits, 2 costs, 5 mixed.

Bigger adoption tax break for families

Beginning with tax years after December 31, 2025, you can subtract more adoption costs on your Arizona return. Singles and heads of household can subtract $5,000. Married couples filing jointly can subtract $10,000. For earlier tax years, the limit stays $3,000. The subtraction applies to unreimbursed adoption expenses.

Jobs-and-investment credit for new facilities

Arizona offers a credit equal to 10% of the smaller of your qualifying investment or a per‑job cap times net new full‑time jobs. The per‑job cap is $200,000 if total qualifying investment is under $2 billion, or $300,000 if it is $2 billion or more. You claim the credit in five equal yearly installments. Preapproval, postapproval, wage and health benefit rules, and job‑hour and tenure rules apply. Excess credit may be refunded, and improper or relocated projects can be recaptured.

Research tax credits revamped, old one repealed

Arizona updates the research credit formulas. For smaller excess amounts, the credit equals 20% starting with years on or after December 31, 2030; earlier years use higher rates. For larger sums, the credit adds a flat amount plus 11% of the excess starting in 2030. An extra 10% credit for basic research payments to Arizona universities is capped at $10 million per year. Small employers (fewer than 150 workers) may receive a refund of 75% of unused credit with approval. The prior research credit statute in section 43-1074 is repealed.

Manufacturing infrastructure aid: higher cap, stricter rules

Arizona raises the statewide limit for the manufacturing infrastructure distribution program to $250 million through June 30, 2027, $300 million through June 30, 2028, and $350 million after that. The state’s maximum share of infrastructure cost drops from 80% to 75%. To qualify, projects must meet higher investment thresholds: $3 billion in counties with 800,000 or more people and $100 million in smaller counties. Payments stop when the statute’s applicable percentage of total cost is reached.

Corporate tax base: new breaks and add-back

Arizona updates corporate income rules. Corporations get clarified subtractions, such as partner-share adjustments, some wage credit and depreciation fixes, and other listed items. For tax years after December 31, 2025, corporations must add back the federal special depreciation under IRC 168(n) if not already added. The law also repeals section 43-1161.

Arizona adds back special depreciation

Beginning with tax years after December 31, 2025, individuals must add to Arizona income the federal special depreciation for qualified production property under IRC 168(n), if not already added. This applies if you claimed that federal allowance. It raises Arizona taxable income for affected filers.

Property tax exemptions rise each year

Arizona increases certain property tax exemption and limit amounts every year. The updates use inflation. Starting in tax year 2026, one assessment limit also rises with the federal house price index. This helps veterans, surviving spouses, and people with total and permanent disabilities who claim these breaks.

More oversight for stadium and district spending

Districts must submit an annual report by October 1 covering activities, revenues, and spending. Any project over $500,000 must be presented to the Joint Legislative Committee on Capital Review. Districts must do public outreach and provide materials about their work. A large-county stadium district must report each year by November 1 through 2055 on projects and team contributions. Boards in some counties may appoint the county chief financial officer as treasurer; otherwise the county treasurer serves.

Set timetable to review tax credits

Arizona sets a fixed schedule for which income tax credits lawmakers review each year. The timetable assigns specific credits to years ending in certain digits. This adds regular oversight without changing your tax bill today.

Pinal road tax funds held in escrow

Pinal County transportation excise tax money that remains in escrow or is held by the state stays there until the Legislature appropriates it. This applies retroactively from after April 9, 2026. It covers net revenues not already distributed or refunded, plus interest. This can delay local spending on road projects.

District grants favor sales tax projects

At least 80% of a district’s grants and support (after expenses and debt service) must go to projects that generate sales tax revenue. Districts may also pledge certain tax revenues to secure bonds for building multipurpose facilities. This shifts grants toward revenue‑producing projects and expands borrowing options.

Mixed limits on districts taking property

In counties under 1,500,000 people, certain countywide districts can use eminent domain. In counties with 1,500,000 or more people, and in subsection B districts, they cannot use eminent domain. Subsection C districts cannot buy or own real property. This changes when and where districts can take or hold land.

Sponsors & Cosponsors

Sponsors

There is no primary sponsor on record.

Cosponsors

  • David Livingston

    28 • House

  • Julie Willoughby

    13 • House

  • Michael Carbone

    25 • House

  • Neal Carter

    15 • House

  • Steve Montenegro

    29 • House

Roll Call Votes

All Roll Calls

Yes: 31 • No: 5

House vote • 6/11/2026

THIRD: Passed

Yes: 23 • No: 5

House vote • 6/10/2026

C&P

Yes: 8 • No: 0

Actions Timeline

  1. Signed by Governor

    6/13/2026Governor

  2. Senate First Reading

    6/11/2026Senate

  3. Third Reading: Passed

    6/11/2026House

  4. Miscellaneous Motion: Passed

    6/11/2026House

  5. Third Reading: Passed

    6/11/2026House

  6. Committee of the Whole: do pass

    6/11/2026House

  7. House Second Reading

    6/10/2026House

  8. undefined: C&P

    6/10/2026House

  9. undefined: DP

    6/10/2026House

  10. House First Reading

    6/9/2026House

Bill Text

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