Arizona Legislature: Historic income tax cut passes, headed to governor’s desk

By The Arizona Republic

The Arizona House and Senate reconvene Thursday to consider the state budget and final bills as the legislative session draws toward an end. Reporters Andrew Oxford and Mary Jo Pitzl are covering what’s happening hour by hour at the state Capitol.

1:45 p.m.: Historic tax cut passes

A plan that will drop Arizona’s income tax rate to 2.5% over three years (or longer if growth is sluggish) passed in the House on a 31-29 party line vote.

Republicans hailed it as “historic” (the legislative budget office backs this up) and noted it  contains a cut for all taxpayers. Democrats complained it is a “giveaway” to wealthy Arizonans.

The current rates range from 2.59% to 8%, with the top rate paid on federally adjusted gross income of $250,000 or more.

The new tax policy recognizes the 3.5% surcharge top earners must pay for education but caps their total tax liability at 4.5% — meaning they will pay 1% into the general fund while all others would pay at the 2.5% rate.

Tax savings range from $4 at the lowest income ranks to $350,000 at the highest end.

The tax plan now goes to Gov. Doug Ducey for his signature.

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