Hobbs Vetoes Tax Relief Bill

On Friday, Arizona Gov. Katie Hobbs surprised no one when she announced that she vetoed a tax plan aimed at providing relief for Arizona’s families.

The Legislature sent the first bill passed this legislative session to Hobbs’ desk on Thursday.

Republicans said the plan would deliver Arizonans $1.1 billion in tax relief over three years.

Arizona House Speaker Steve Montenegro said the bill, dubbed the Arizona One Big Beautiful Bill, provided tax relief over three years while maintaining a balanced state budget and protecting Arizona’s reserves.

This is very unfortunate for everyday, hard-working Arizonans and small businesses. This veto creates huge uncertainty, and denies working people of the very tax reductions Governor Hobbs claimed to support.

We should all be able to agree that tips, overtime and social security… https://t.co/0PP4CeOGF0

— Matt Gress (@MatthewGress) January 16, 2026

“Yesterday, the Arizona House came together with the Senate to lower costs and improve affordability through tax relief for Arizonans,” said Montenegro. “Governor Hobbs’ veto of our tax relief act is a failure of leadership that will create unnecessary confusion and disruption for millions of Arizona taxpayers.”

Montenegro claimed that Republicans “acted early and responsibly to give families, seniors, and small businesses certainty as tax filing season approaches. We passed a clear plan—months in the making—that conforms Arizona law to federal tax changes, provides relief for working families, and tells taxpayers, in statute, what they owe.
The Governor admitted swift action was needed. She asked for a bill to be sent quickly. We did exactly that.”

“Instead,” said Montenegro, “Arizonans are left with mixed signals from the executive branch, uncertainty for taxpayers, and confusion for employers and tax preparers—all created by this veto.”

By vetoing the bill, Governor Hobbs vetoed:

• An increase to the standard deduction
• A deduction for childcare expenses
• An increase to the child tax credit
• No tax on tips
• No tax on overtime
• Relief for seniors

“The chaos ahead is not accidental,” said Montenegro. “It is the direct result of Governor Hobbs’ decision to veto a responsible tax conformity bill with no replacement plan.”

“The Republican majority in the legislature is hell-bent on giving handouts to the wealthiest Arizonans while hiking taxes on working seniors,” claimed Hobbs upon the bill’s passage. “Their proposal gives hundreds of millions of dollars in tax breaks to special interests, removes a tax cut for working seniors, and adds even more handouts to those who are already rich. If Republicans want to give a billion dollar tax break for the wealthy, they must show the people of Arizona how they will pay for it without slashing the vital services our constituents rely on. We need tax cuts for middle class families now.”

Hobbs introduced her budget proposal on Friday, which Republicans say “raise serious concerns about unrealistic revenue assumptions, hidden tax increases, and policies that would raise costs for Arizona families while creating long-term tax confusion.”

“Governor Hobbs’ budget is a fantasy built on fake revenues and hidden tax hikes,” said Montenegro. “She can call them ‘revenue enhancements,’ but Arizona families will feel them as higher costs and higher taxes. This is a liberal, California-style budget that grows government, creates tax chaos, and gambles with taxpayer dollars. House Republicans will reject it and fight for a responsible, balanced budget that puts Arizona families first.”

🚨Governor Hobbs vetoed tax relief for Arizona families!

She vetoed:
❌ A higher standard deduction
❌A childcare deduction
❌ A larger child tax credit
❌ No tax on tips
❌ No tax on overtime
❌ Tax relief for seniors

House and Senate Republicans did our job. We acted early.… pic.twitter.com/VIwmXdknDS

— Arizona House Republicans (@AZHouseGOP) January 16, 2026