Arizona Lawmakers Disagree Over How to Cut State Taxes

Arizona Governor Katie Hobbs (D-AZ) signed an executive order directing the state's tax department to update tax forms following new federal tax laws from President Donald Trump, which has created disagreement with Republican legislative leaders over how to proceed.

The recently signed executive order updates state tax forms based on new federal tax laws passed by Congress earlier this year. The Governor calls it her "Middle Class Tax Cuts Package" and says it will help Arizona families dealing with higher living costs.

The proposed tax changes would increase the standard deduction, the amount of money you can earn without paying taxes on it. Single people would get an extra $750, while married couples filing together would get $1,500 more. 

People over 65 would get an additional $6,000 deduction. Workers could also deduct tips, overtime pay, and interest paid on car loans for American-made vehicles.

Argument Against Changes

However, Republican House leaders, including Speaker Steve Montenegro (R-AZ) and five other members, criticized the executive order. They called Hobbs's announcement "opportunistic" and said she was "leading from behind" on tax policies that Republicans in Congress had already passed.

The Republican statement emphasized that the executive order "changes nothing" and that actual tax relief requires legislation passed by the Arizona Legislature. They urged Governor Hobbs to call a special session on tax conformity beginning January 12th, the first day of the legislative session, to provide certainty for taxpayers heading into filing season.

Governor Hobbs indicated that while she's moving forward on provisions benefiting middle-class taxpayers, additional tax conformity measures affecting corporations and high earners would be negotiated during the FY27 budget process. 

Both sides claim to support tax relief for Arizona residents, though they differ significantly on process and messaging.

“The Arizona House stands ready to act, and we are prepared to end the confusion on day one,” the House leaders explained. "[We] look forward to sending the Governor a bill that delivers it.”