2019 Arizona Tax Law Changes

Please note this is general info, subject to limits.  If you have any questons or concerns or would like us to go over what this mean to you, please give us a call.  We are happy to help!

Below are two charts showing changes in tax rates for year 2019.  

Data is based on Arizona published tax rates:

Source:  https://azdor.gov/news-events-notices/news/updated-guidance-arizona-individual-income-taxpayers 

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2019 Arizona Tax Law Changes - More Info

Earlier this Summer of 2019, HB 2757 was signed into law by Arizona governor, finally clarifying unanswered questions regarding the state of Arizona adopting Federal tax changes which were placed in effect on Federal Income Tax returns as of 1/1/2018.

It was anticipated that Arizona would adopt the federal tax law changes for year 2018 but we could not be certain until this law was passed.  Based on the anticipated adoption of changes, Arizona issued its tax forms on assumption that Federal AGI figure as a starting point would become allowed, as it was in the past.  Now that the law has passed, this approach was proven to be the correct one and, as a result, no amendments are needed for tax year 2018 Arizona returns.  Now, we can focus on tax law changes for the state for year 2019 and forward.

Below are the changes that will affect most of our clients listed in summary format for convenience.

As always, please feel free to contact our office to go over details or your specific situation, we are happy to help!

Summary of changes for Tax Year 2019:

1. As was case in 2018, in 2019 federal AGI will be accepted as starting point of Arizona Income Tax Returns.
2. As is case with Federal:
   1. Standard Deductions will also increase for Arizona,
   2. Personal Exemptions will be discontinued for Arizona.
3. In place of Personal Exemptions, Arizona will provide credits for certain dependents.
   1. Phaseout is for Federal Adjusted Gross Income over $200,000 if filing as Single/MFS/HOH, $400,000 if filing MFJ.
4. Arizona is reducing number of and overall lowering tax brackets, details below, useful graphs above.

More info:

• Remember, “deductions” lower your taxable income whereas “credits” lower your tax assessed dollar-for-dollar. 
  So, for example, assuming a 4.17% flat tax for simplification, a deduction of $100 is equal to a credit of $4.17, they would both affect your end tax result by the same amount.

Link to bill:  https://www.azleg.gov/legtext/50leg/2r/bills/hb2757h.pdf

Link to Arizona Summary:  https://azdor.gov/news-events-notices/news/updated-guidance-arizona-individual-income-taxpayers