Following Governor Katie Hobbs’ State of the State address, a group made up of independent businesses sounded the alarm against the Governor’s tax conformity proposal.
“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, that 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,” said National Federation of Independent Business (NFIB) State Director Chad Heinrich.
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.”
Arizona Senate and House Republicans are advancing a plan to align the state tax code with federal tax reforms from President Trump’s One Big Beautiful Bill – which will provide Arizonans an estimated $1.1 billion in tax savings over the next three years. The plan will make a few adjustments to Arizona’s existing tax structure, focusing on affordability and helping working Arizona families. Moving quickly will provide clarity for taxpayers who are preparing to file.
While the Trump Administration takes action to undo the economic damage caused by four years of Biden-Harris policies responsible for fueling inflation, higher energy prices, and rising costs of everyday life, Arizona Republicans are spearheading efforts at the state level to ease these burdens with SB 1106/ HB 2153. Introduced by Senate Finance Committee Chairman J.D. Mesnard and House Ways & Means Committee Chairman Justin Olson, the goal of this plan is to help families keep more of what they earn.
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