Arizona Tax News
Arizona has not yet passed a "conformity" bill that will reconcile Arizona tax law to federal for 2025. As a result, Arizona implementation of various key aspects of the federal "One Big Beautiful Bill Act" (OBBBA or OB3) are still up in the air.
Since 2022, the state income tax is now a flat tax of 2.5% for nearly everyone
For taxpayers who do not itemize deductions, Arizona allows an increase to the standard deduction for charitable contributions. For 2025, the charitable deduction amount was increased to 34% of the qualified charitable contributions made during the tax year.
Arizona follows the federal standard deduction, so Arizona standard deductions increased for 2025 according to the federal cost of living adjustment:
Taxpayers age 65 or older get an additional $2,100 standard deduction. At this time, Arizona does not apply the federal $6,000 "senior deduction." That additional deduction was established by Congress to offset some of the taxability of Social Security on federal returns. Arizona excludes all Social Security benefits from Arizona taxable income so the federal senior deduction is not likely to be implemented here.