IN FOCUS - Dec. 5, 2025

Call it, Arizona’s Mostly Beautiful Bill. 

This week, Governor Katie Hobbs unveiled plans for a “Middle Class Tax Cuts Package,” which involves adopting some - but not all - of the federal tax changes created by President Trump’s One Big Beautiful Bill. 

The Hobbs administration plan includes a reduction in personal income taxes and the elimination of tax on tips and overtime. Total hit to State coffers: $215 million. That’s still roughly $120 million less than the price tag of full federal tax conformity. The discrepancy is already receiving pushback from Republican legislative leaders, who want the State of Arizona to conform with 100% of President Trump’s tax cuts - including allowing bigger tax write-offs for businesses and reductions for wealthy filers who itemize their taxes.

Negotiations between the 9th Floor and lawmakers are further complicated by the April 15 deadline for people to file their taxes. The general effective date for most legislation is 90 days after the session adjourns sine die … whenever that is.

Legislators are asking Gov. Hobbs to call a Jan. 19 special session - concurrent with the regular session - to expedite a tax deal that can be enacted and take effect before mid-April. According to the Governor, a tax conformity special session is “on the table.” Even with a special session, the timeline is exceedingly tight.

Arizonans will get a fuller look at Governor Hobbs’ tax plan on Friday, Jan. 16, when she releases her Executive Budget.