The federal income-tax reform legislation could result in higher taxes at the state level if Arizona doesn’t adjust their deductions, lower their tax rates or adopt other changes. A report released by the Arizona Department of Revenue projects that Arizona may increase income tax revenue by roughly $236 million in additional revenue during fiscal 2019, the first full year impacted by the change in federal law.
The reason is that the federal government has repealed or substantially reduced a number of itemized deductions, which would discourage their use by people on both federal and state tax returns. The question is what does the Arizona Legislature intend to do to offset this increase in taxes on Arizona residents. Action is required to change either the Arizona deductions or to change the marginal tax rates.
Disclaimer: As submitted to the Arizona Daily Star.