Republican lawmakers moved quickly to pass legislation on Thursday to bring tax policies that align with federal tax cuts. On a party-line vote, lawmakers sent the legislation to Gov. Katie Hobbs’ desk for approval.
Following passage in both chambers, Arizona House and Senate Republican leaders celebrated the approval of HB 2153 and SB 1106 — what they call Arizona’s “One Big Beautiful Bill.”
The comprehensive tax conformity package delivers approximately $1.1 billion in tax relief over three years which Republicans claim maintains a balanced state budget and protecting Arizona’s reserves.
Republicans say the legislation aligns Arizona’s tax code with key federal reforms while rejecting provisions that benefit high-income taxpayers. It delivers direct relief to working families, seniors, and service-industry employees by:
Congressman Andy Biggs, who hopes to face off against Governor Hobbs in the upcoming gubernatorial race applauded the bills’ passage on X.com:
I’m pleased to see Arizona House & Senate Republicans act quickly to implement the tax cuts President Trump & I delivered this past summer for Arizona families, seniors, and the working class.
If Katie Hobbs vetoes this, it’s a sign she’s not serious about supporting Arizonans. https://t.co/hjmteqEsb0
— Andy Biggs (@andybiggs4az) January 15, 2026
“This legislature has a strong record of cutting taxes and lowering costs for Arizona families,” said Senator JD Mesnard. “From enacting a 2.5 percent flat income tax, I authored several years ago, to delivering direct tax rebates, to cutting the rental tax and reducing taxes on small businesses, Republicans have repeatedly fought to reduce the tax burden on our citizens. Our plan in 2026 builds on that record by further lowering taxes, supporting job creators, and helping all Arizonans keep more of the money they earn. In particular, the plan helps working families struggling with higher prices by increasing Arizona’s child tax credit and creating a deduction for childcare expenses. We’re committed to moving quickly so Arizonans can realize a larger refund without delay this tax filing season.”
“The Governor jumped ahead of the law by issuing state tax guidance this week that assumes legislative action – which hasn’t happened yet – and her recent executive order only deepens confusion. This kind of unilateral overreach undermines the process and leaves families, tax preparers, and businesses stuck in the middle,” said House Speaker Steve Montenegro. “The Legislature is moving to restore certainty, respect the separation of powers, and make sure Arizonans have clear, lawful guidance.”
A group of independent business owners came out in support ahead of the bills’ passage and criticizing the governor’s proposed plan.
“It’s unclear if the left hand knows what the right hand is doing in the Hobbs administration. Governor Hobbs’ tax conformity proposal includes abandoning the 2025 forms posted by her own Department of Revenue and suggesting that taxpayers wait until budget negotiations conclude to know where the State of Arizona stands with tax conformity. With recent years as a guide, which means taxpayers would be left in a lurch until June 2026 for certainty on what taxes they owe for the year 2025. This should be a non-starter.”
Heinrich continued, highlighting Arizona small business owners’ support for HB 2153 and SB 1106 to align the state tax code with the federal tax reforms passed in 2025.
“Small business owners breathed a sigh of relief when the One Big Beautiful Bill Act (OBBBA) passed and collectively looked forward to the certainty that it provided. Now, the Governor wants to upend all of that to score partisan political points, breaking precedent with how Arizona has always addressed federal tax changes. Delaying a decision on implementation lays the burden squarely on the backs of small business owners. Instead of moving forward with plans to hire and grow, Arizona’s small businesses and economic growth will be put on hold if the Legislature and Governor don’t act swiftly.
“In Arizona, small businesses employ 1.2 million people. In turning a blind eye to Arizona’s small business owners, the Governor’s tax conformity proposal would place these employers in limbo–forcing owners to wait on expansion plans and hiring decisions. With small businesses creating 7 of 10 new jobs, this means Arizona’s economy stalls without full conformity with the federal income tax changes. NFIB will continue working with state lawmakers to ensure Main Street Arizonans do not miss out on critical tax relief.”
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