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HB 2785

conformity; internal revenue code; deductions

57th Legislature - Second Regular Session Introduced by Justin Olson

Arizona bill to align state tax deductions with federal IRC rules; passed legislature but vetoed by Governor over apparent fiscal or policy concerns.

Transmit to Governor
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Bill Summary · HB 2785

Legislative bill overview

HB 2785 seeks to align Arizona's state tax code with the federal Internal Revenue Code regarding allowable deductions. The bill was passed by the Arizona legislature but was vetoed by the Governor on February 12, 2026, preventing it from becoming law.

Why is this important

Tax code conformity affects how much income Arizona residents and businesses report to the state, directly impacting state tax revenue and individual tax liabilities. Changes to deduction rules can significantly influence the progressivity of the tax system and the overall tax burden on different income groups.

Potential points of contention

  • Revenue impact: Conforming to federal deduction rules may reduce state tax collections, requiring either spending cuts or alternative revenue sources
  • Deduction specificity: The bill's details on which deductions are affected remain unclear from the summary, but certain deductions (like state and local tax deductions) could be politically contentious
  • Governor's rationale: The veto suggests concerns about fiscal impact, fairness, or implementation that warrant public scrutiny regarding the bill's specific provisions

Compiled from official sources — confirm details with the bill’s official record.

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