Department’s actions reflect federal law and Governor’s directive, simplify tax filing and avoid burdensome administrative costs, and provide financial relief and certainty to Arizonans
The Arizona Department of Revenue (ADOR) is providing the following information to outline the scope of Governor Hobbs’ Executive Order and the status of Arizona’s 2025 Tax Year individual income tax forms. These forms reflect the department’s regular process of assuming conformity to the federal Internal Revenue Code. They also reflect the Governor’s Executive Order, which aims to provide financial relief and certainty to Arizonans, simplify state income tax filing, and reduce administrative burden and costs.
Should taxpayers wait to file their taxes?
No. Every year Arizona’s individual income tax forms are issued prior to the Arizona Legislature conforming to the changes made to the Internal Revenue Code in the prior year.
Will taxpayers need to refile their taxes if the provisions in Arizona’s 2025 Tax Year individual income tax forms are not approved by the Arizona Legislature?
Possibly. If taxpayers claim a certain provision on the forms that later proves to be inconsistent with the law the Arizona Legislature ultimately passes they may need to amend their 2025 Tax Year Arizona individual income tax form. If taxpayers must file an amended return, DOR will provide guidance, and taxpayers would not be subject to penalties or interest provided they amend their 2025 tax year return by October 15, 2027.
What will it cost the state if the provisions on the current form aren’t approved by the Legislature?
Arizona has conformed to the federal standard deduction since tax year 2019.
Without Governor Hobbs’ executive order, Arizona’s standard deduction would not have matched the federal amount, creating potential confusion for nearly 90 percent of Arizona taxpayers who claim the standard deduction each year, resulting in millions of amended returns, and significantly increasing processing costs for the state and delays for taxpayers.
With Governor Hobbs’ executive order, Arizona’s standard deduction matches the federal amount, drastically reducing the likelihood that people have to refile.
If the Legislature passes an Internal Revenue Code conformity bill that is consistent with the forms already released by ADOR, there will be no need for taxpayers to amend their 2025 Arizona individual income tax returns. Additional changes outside the provisions already in tax forms released by ADOR, such as the ones contemplated by SB 1106, could result in significant costs to the department depending on the degree of change and the number of Arizonans taking advantage of those changes.
What did Executive Order 2025-15 do?
Governor Hobbs’ Executive Order directed ADOR to include the following five provisions in the 2025 Tax Year Arizona individual income tax forms:
- Increased standard deduction
- Subtraction for seniors 65 and older
- Subtraction for qualified tip income
- Subtraction for qualified overtime compensation
- Subtraction for qualified vehicle loan interest
What forms did ADOR release?
As part of its regular process, ADOR publishes an annual state income tax form based on changes in federal tax law. This year, it released the 2025 Tax Year individual income tax forms, which also reflect changes from Governor Hobbs’ Executive Order 2025-15, including an increased standard deduction and four income tax subtractions.
Do Arizona’s 2025 Tax Year individual income tax forms include all provisions in the Governor’s plan?
Yes. Arizona’s 2025 Tax Year individual income forms were issued with the following five provisions:
- Increased standard deduction
- Subtraction for seniors 65 and older
- Subtraction for qualified tip income
- Subtraction for qualified overtime compensation
- Subtraction for qualified vehicle loan interest
Do Arizona’s 2025 Tax Year individual income tax forms include all of the provisions in H.R. 1?
ADOR prepared the 2025 Tax Year individual income tax forms based on conformity with parts of H.R. 1—specifically federal adjusted gross income, which is the starting point for Arizona’s individual income tax. Other parts of H.R. 1 that do not affect federal adjusted gross income, such as federal credits, are not included on the forms.
Why did ADOR publish forms that assume full conformity with federal tax changes before the Legislature passes them?
Arizona law dictates that federal adjusted gross income be used as the starting point for calculating Arizona income tax. ADOR has followed this approach for more than 30 years when issuing annual tax forms. Using a different starting point would make filing more complicated for taxpayers and tax preparers and would not reflect how Arizona’s tax system is designed. |
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