Relief is on the way for Arizona renters struggling under the weight of historic inflation, thanks to a tax relief measure passed by Republicans that was signed into law on Tuesday.
The Governor’s signature on the bill was part of the negotiations surrounding an extension of the Maricopa County transportation tax that some Republicans and every Democrat had sought. As the housing crisis continues to have devastating impacts on seniors and taxpayers who are living paycheck to paycheck, the bill was a top priority for conservative lawmakers, particularly House Speaker Ben Toma and Senate President Warren Petersen.
The bill, SB 1131, will prohibit rental taxes on the monthly bills Arizona tenants pay. Currently, this tax can cost as much as $200 per month. Republicans said that this is “money our citizens could use to pay a medical bill, purchase food, buy gas, and other necessities many are having a tough time affording.”
According to legislative data, there are approximately 70 municipalities within Arizona charging this tax, even while cities and towns continue to collect record revenues. From fiscal years 2019 to 2023, state-shared revenues from both sales and income taxes combined grew $733 million, or 59%, and this increase was on top of any sales taxes or property taxes individually levied by each city. Between FY 2024 and FY 2025, those shared revenues are expected to grow by an additional $389 million.
While some city mayors and council members are complaining about the lost revenue, legislative Republicans argue that cities and towns will be receiving more money in future state-shared revenues to offset these tax cuts.
“Rental prices aren’t going down anytime soon, and Arizona tenants are agonizing over just how much more expensive it is now to rent an apartment or house than ever before,” said Majority Whip Sine Kerr. “For Metro Phoenix, June of this year saw the second-highest monthly total of evictions since the 2008 Great Recession. According to Maricopa County records, landlords filed to evict nearly 7000 times last month. We needed to act promptly. This bill will provide some help, and I’m proud the Majority Caucus spearheaded this change in tax policy.”
SB 1131 will take effect on January 1, 2025. This delayed implementation came at the request of Democrats to allow cities and towns time to adapt to this tax reform.
“Charging a rental tax is bad tax policy,” said Senate President Warren Petersen. “In fact, Arizona is one of only two states in the nation currently allowing this. While our first attempt at eliminating the tax passed out of the Legislature with solely Republican support and was eventually vetoed by the Governor, we’re grateful our Democrat colleagues came to the table with us and realized the real, tangible relief this reform will provide.”