What high earners in Arizona need to know about filing taxes after judge struck down Proposition 208

(Disclosure: Rose Law Group represents Ann Siner of My Sister’s Closet and Judge John Buttrick in their litigation efforts against 208.)

By Russ Wiles | Arizona Republic

A Maricopa County Superior Court judge recently struck down an individual income-tax surcharge approved by voters when they passed Proposition 208, and the Arizona Department of Revenue has now issued guidance for affected taxpayers.

The net result: Affected high-income individuals don’t need to take any additional action during the current tax season, whether they already have filed their state income-tax returns or not. Nor do they need to worry about paying a higher tax liability because of the surcharge.

The Department of Revenue on March 15 said it’s working with tax-software partners to update the state’s individual income tax forms and tax administration system after the high court struck down the proposed surcharge May 11 as unconstitutional.

The ballot measure passed by voters in 2020 would have created a 3.5% surcharge, on top of the state’s maximum individual rate of 4.5%. That would have created a top rate of 8% for singles with taxable income above $250,000 or married couples filing jointly with taxable income over $500,000.

The additional money collected by the surcharge would have augmented education funding, but critics including Gov. Doug Ducey said it would have hurt the state’s economic competitiveness. 


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March 2022