The Arizona Legislature is moving forward with HB 2153 and SB 1106, a tax conformity plan projected to save state taxpayers around $1.1 billion over the next three years. Lawmakers say the proposal will maintain a balanced budget and protect Arizona’s current financial standing.
House Appropriations Chairman David Livingston responded to criticism from Governor Hobbs, who has claimed the Legislature’s plan would mainly benefit wealthy residents. “It’s bizarre that the Governor continues to claim the Legislature is supporting tax cuts for billionaires,” said Livingston. “The 2025 income tax forms issued by Governor Hobbs’ own Department of Revenue fully conform to the expanded State and Local Tax (SALT) deduction, while the House and Senate plan explicitly decouples from it. She has apparently not read our proposal—or reviewed what her own agency is implementing.”
Governor Hobbs, in her State of the State address, called on lawmakers to send her an income tax conformity bill that only partially conforms to federal changes under the One Big Beautiful Bill Act, including rules for tipped wages, overtime pay, and new deductions.
Senate Appropriations Chairman David Farnsworth spoke about updating Arizona’s tax code. “Collaborating to enhance our tax system benefits everyone,” said Farnsworth. “Arizona’s tax code needs to be updated to accurately calculate adjusted gross income while ensuring it remains straightforward and understandable for taxpayers. Arizonans want to file their taxes with confidence, and I appreciate the thoughtful efforts of Senator Mesnard and Representative Olson in proposing a practical solution.”
Legislative leaders credit years of controlled spending by Republicans for Arizona’s fiscal stability. They argue this approach has prioritized key government services while encouraging economic growth.
“By working together and focusing on our shared priorities, Arizona is advancing the Arizona One Big Beautiful Bill from a strong and stable foundation,” said Chairman Farnsworth. “Our revenue numbers look encouraging, our reserves remain intact, and recent spending reductions allow us to responsibly align with the Trump tax cuts. Fiscal discipline and tax relief go hand in hand, and this approach demonstrates our commitment to both.”
The Chairmen also highlighted that corporate income tax collections have been higher than expected—a sign they say reflects effective economic policy rather than reliance on increased government spending.
“Responsible budgeting has real consequences—in a good way,” Livingston added. “It means that when families are struggling with higher costs, we can act decisively. We can lower taxes, improve affordability, and provide certainty during tax season without shifting risk onto future taxpayers.”
Key provisions in HB 2153 and SB 1106 include increasing the child tax credit, creating a deduction for childcare expenses, exempting tips or overtime pay from state taxes per recent federal reforms—all while aiming to preserve long-term fiscal health.
A joint hearing of these bills by the House Ways and Means Committee and Senate Finance Committee is scheduled for Wednesday afternoon after floor sessions.
Carbone was elected as a Republican representative for Arizona’s 25th House District in 2023.
