HB4152

THE CONTEXT: Current law conforms Arizona's income tax calculation to the Internal Revenue Code (IRC) of 1986, as amended, in effect on January 1, 2025, including those

WHAT THE BILL DID: facility revenue to district statute. (Sec.

WHY IT MATTERED: The practical reason for this bill was to make the state tax, regulatory, or economic rule for 2026-2027 more predictable. It would ( A.R.S. 43-105 ) Generally, each year changes are made to the IRC that affect the Arizona income tax calculation. Tax conformity with the IRC is deemed necessary because the calculation of Arizona corporate income tax begins with federal taxable income and the federal adjusted gross income (FAGI) is the starting point for individual income tax. These amounts are then modified by additions and subtractions to arrive at the Arizona taxable income. On July 4, 2025, major federal tax changes were enacted through H.R. 1 that impact federal taxable income and FAGI which the state would conform to by updating the statutory definition of the IRC. Provisions Conformity, and would also updates the statutory definition of IRC to include all provisions in effect as of January 1, 2026, with the specific adoption of all the retroactive effective dates, but excluding any changes to the IRC enacted after January 1,, rather than leave the current rule unchanged.