Capitol roundup: Tax fight heats up as GOP bill goes to Hobbs
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Brendan Lynch/Axios
Republican lawmakers fulfilled their pledge to send Gov. Katie Hobbs their tax cut bill by the week's end, likely teeing up the session's first veto.
The big picture: The annual process of conforming the state's code to match federal changes is more contentious than usual this year as the Democratic governor and Republican-controlled Legislature push competing tax cut plans.
- GOP lawmakers want to largely mirror the changes Congress and President Trump made in last year's One Big Beautiful Bill, while Hobbs wants only partial conformity.
What we're watching: A spokesperson for Hobbs wouldn't comment on whether the governor will veto the bill, but Hobbs previously said that she wants her "middle-class tax cuts" package first and that she'll discuss other cuts later, when they negotiate the budget.
- In a press statement after the Republican tax plan passed out of committee Wednesday, Hobbs rejected the GOP proposal as a "reckless tax break for the wealthiest Arizonans."
Zoom in: The Republican plan would cost the state $440 million, while Hobbs says her proposal carries a $220 million to $250 million price tag. Per the Arizona Republic, key differences include:
- Hobbs wants an additional $6,000 standard deduction for seniors and a deduction for interest on new car loans.
- Republicans want business tax breaks worth about $100 million annually, an increase in the state's per-child tax credit, and deductions for child care, pensions and retirement investment programs.
The intrigue: The Arizona Department of Revenue's tax forms assume full conformity with federal law, which doesn't fully match either plan.
- That means people who file returns before an agreement is reached will have to re-file later.
Between the lines: The GOP bill also includes a provision opting Arizona into a federal school voucher program as part of the One Big Beautiful Bill.
- Hobbs hasn't decided whether to participate and is awaiting more federal guidance on implementation, spokesperson Christian Slater told Axios.
What's next: The Hobbs administration will unveil its executive budget proposal Friday.
In other Capitol news:
📸 Automatic license plate readers and the data they collect could be used for only limited purposes under a bill sponsored by Sen. Kevin Payne (R-Peoria).
- Law enforcement and other government agencies could use them for only criminal investigations, missing person searches and traffic violations involving hazardous accidents.
- The bill comes as cities' contracts with Flock Safety for license plate reader systems have come under scrutiny.
🏘️ Institutional investors would be prohibited from owning more than 50 homes in Arizona and barred from bidding for houses in the first 60 days after they go on sale, under proposed legislation from Rep. Nick Kupper (R-Surprise).
- The bill echoes a recent proposal by President Trump.
- The idea has bipartisan support — House Minority Leader Oscar De Los Santos (D-Laveen) has a similar proposal.
Interfering with ICE activities would be a felony offense under legislation sponsored by Rep. John Gillette (R-Lake Havasu City).
- Protesters disrupted a press conference unveiling the bill at the Arizona Capitol on Monday, forcing supporters to move the event indoors.